Finance Minister Arun Jaitley today 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 the CII, the Indian Embassy and Japan Chamber of Commerce here.
He said Prime Minister Narenda Modi on November 8 last year took the unprecedented decision to demonetise 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 a few months. The remonetisation got substantially completed,” he said.
The finance minister said 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 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 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 the fastest growing major economy in the world, all of you are welcome to India. It is a far easier place to invest and far more profitable place to invest,” he told the investors present at the meeting.
Jaitley said the government has systematically addressed the challenges facing ease of doing business in the country, including, getting environmental clearances.
In this year’s budget, it was decided that the Foreign Investment Promotion Board (FIPB) would be abolished “so that investors, who require permission to get into the country, don’t have to go through multiple permissions.”
Also, the discretions of the government, which had earlier led to malpractice and corruption, have been done away with and all natural resources are being allocated through the market mechanism, ridding in one stroke corruption that existed in India.