Finance Minister Arun Jaitley on Monday said remonetisation, following the world’s largest note ban, has been substantially completed and the move will result in expansion of the tax base in the country.
In November 2016, the government junked 500 and 1,000 rupee notes, which made up 86.4 per cent of the country’s circulating currency.
As demonetised currency was allowed to be deposited in bank accounts or exchanged for new currency, the government introduced new 2,000 and 500 rupee notes.
“India was not a tax compliant society. A very large part of the economy was cash-centric. This problem needed to be addressed. It requires a lot of political courage to resolve the problem,” he said at an Interactive Session on ‘India’s Business Environment: Reforms and Opportunities’ organised by CII, Indian Embassy and Japan Chamber of Commerce here.
He said that Prime Minister Narenda Modi onNovember 8last year took the unprecedented decision to demonetise the high denomination currency, which was the largest currency replacement anywhere in the world.
“Eighty six per cent of India’s currency was replaced within a matter of few months. The remonetisation got substantially completed,” he said.
The finance minister said that the move brought about a far greater movement towards digitisation.
“It ended the anonymity related to cash operated in the system and hopefully, in the days to come, the taxation base of India would expand,” he said.
The finance minister also said that India clocked between 7 and 7.5 per cent economic growth rate even in an adverse global environment.
With a series of reforms and growth increasingly returning to the world, “I am sure that over the next few years this growth itself will increase,” he said.
He said that over the next decade or two, the avenues for investment in India for long-term safe investments are going to be plentiful.
“I am sure in this changed environment where India promises to maintain its position as fastest growing major economy in the world; all of you are welcome to India. It is a far easier place to invest and far profitable place to invest,” he told the investors present at the meeting.
Jaitley said that the government has systematically addressed the challenges facing ease of doing business in the country including getting environmental clearances.
In this year’s budget, the foreign investment promotion board (FIPB) has been decided to be abolished “so that investors, who require permission to get into the country, don’t have to go through multiple permissions.”
“We are now in the process of working out an alternative model as to the system where permission of foreign investment are still required, as to what would be the easiest methodology to effect those permissions,” he said.
In addition, the discretions with the government, which had earlier led to malpractices and corruption, have been done away with and all natural resources are being allocated through market mechanism, ridding in one stroke corruption that existed in India.