Purpose of note ban achieved, claims Jaitley; Rahul asserts it only helped PM's 'friends'

NEW DELHI: Defending the Centre's note ban decision, Finance Minister Arun Jaitley on Thursday said that the invalidation of non-deposited currency wasn't the only object of demonetisation. His defence comes a day after the Reserve Bank of India (RBI) said that 99.3 per cent of junked Rs 500, Rs 1,000 notes have been returned to the banks

"Was the invalidation of non-deposited currency the only object of demonetisation? Certainly Not. The larger purpose of demonetisation was to move India from a Tax Non-compliant society to a compliant society, formalisation of the Economy and a clear blow to the black money," he said.

He also added that cash once deposited removes the anonymity of its owner. "Post demonetisation, about 1.8 million depositors have been identified for enquiry. Many of them are being fastened with Tax and Penalties. Mere deposit in a bank does not lead to a presumption that it is Tax paid Money," he said.

He claimed that the phenomenal increase in the number of Income Tax returns filed (in March 2014, it was 3.8 crore while in 2017-18, this figure has grown to 6.86 crore) is reflective of the impact of demonetisation and is also an evidence that it is a growing economy.

However, Congress hit back at Jaitley saying that the objective of demonetisation was to help Prime Minister Narendra Modi's 'businessmen friends'. "The objective of demonetisation was very clear. It was to help PM Modi's friends. Demonetisation was not a mistake, it was a deliberate move," Congress President Rahul Gandhi said.

Congress leader P Chidambaram had also said that the Indian economy suffered due to the note-ban by way of job loss, closure of industries and the GDP growth. The former finance minister said the RBI figure has suggested that the government had actually demonetised only Rs 13,000 crore and the "country paid a huge price" for it. 

The RBI had on Wednesday said that just a minuscule percentage of currency was left out of the system after the government's unprecedented note ban aimed at curbing black money and corruption. 

Of the Rs 15.41 lakh crore worth Rs 500 and Rs 1,000 notes in circulation on November 8, 2016, when the note ban was announced, notes worth Rs 15.31 lakh crore have been returned. This meant just Rs 10,720 crore of the junked currency did not return to the banking system.

The government replaced old Rs 500 notes with new ones, but no replacement for Rs 1,000 notes have been made. Instead, a new Rs 2,000 notes were introduced post note ban. Post-demonetisation, RBI spent Rs 7,965 crore in 2016-17 on printing new Rs 500 and Rs 2,000 and other denomination notes, more than double the Rs 3,421 crore spent in the previous year.