Soon after former Finance Minister P. Chidambaram taunted the demonetisation scheme asking if it was designed to convert black money into white, Union Finance Minister Arun Jaitley said that the former finance minister had 'no understanding of the objective of demonetisation'.
Responding to a question posed by a reporter regarding Chidambaram's taunt, Jaitley, while addressing a press conference here, claimed that the former Finance Minister was confusing demonetisation to be an exercise to confiscate money.
He, however, hit back at Chidambaram by saying that he took 'no steps to fight black money during his own tenure'.
"He has no understanding of the objective of demonetization. He is confusing it to be an exercise to confiscate money. It was rolled out to give digitization a nudge, eliminate black money and end the anonymity of ownership of cash," said Jaitley.
Chidambaram had asked whether demonetisation was a scheme designed to convert black money into white.
The senior Congress leader "shamed" the Reserve Bank of India for recommending demonetisation.
"Rs 16000 cr out of demonetised notes of Rs 1544,000 cr did not come back to RBI. That is 1%. Shame on RBI which 'recommended' demonetisation," Chidambaram tweeted.
Commenting on the figures regarding demonetisation as published by the Reserve Bank of India (RBI) earlier today, Jaitley opined that while it highlights a 17 percent decline in the volume of cash, attempts are being made to sustain this momentum during remonetisation as well.
"India is predominantly a high-cash economy, and this needs to be altered. Demonetisation was rolled out not to confiscate money, but to take India further towards realizing the goal of being a cashless economy. For this, it was important to integrate formal and informal economy, reduce the quantum of cash, increase taxpayers, tax base, encourage digitization and give a blow to black money," said Jaitley.
"There has been significant expansion of direct and indirect tax base. There has been a 25 percent growth in the personal income tax returns received. Those dealing in cash were compelled to deposit money in banks, thus ending the anonymity of ownership. With the ownership established, it will also be easier to keep a check on tax evasion, and carry out raids as required," he added.
Analysing the ongoing economic reform, Jaitley opined that "each step has facilitated a much needed cash squeeze and will formalize the economy in the long run, including the introduction of compulsory bank accounts, transfer of government subsidy directly into the ban accounts of beneficiaries, check on foreign money, round tripping through treaty misuse, benami property, shell companies, compulsory PAN card requirement for cash expense, demonetisation and the latest Goods and Services Tax (GST)".
Re-iterating the cash squeeze that has posed to be a threat for terrorist elements in the like of Jammu and Kashmir and Chhattisgarh, Jaitley claimed that the shortage of currency has resulted in a shortage of 'stone throwers' for the Separatist.
"For the first time, the RBI has scrutinized each note, which has helped them differentiate fake notes from the authentic ones. The cash squeeze is evident, since these terrorist elements are finding it difficult to mobilise support for them. Without enough cash notes, it is difficult to gather stone throwers as before," said Jaitley.
Speaking on the way forward, Jaitley stated that the next step would be to put an end to black money used in elections, adding that the final stage of proposals is being deliberated.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)