‘Digital Transactions will Boost India’s Economy’ – Union Minister Nirmala Sitharaman
‘Digital Transaction Systems will Boost India’s Economy’- Honorable Union Minister of Commerce and Industry Smt. Nirmala Sitharaman during interaction with citizens of Mangaluru and DK.
Mangaluru: Praising the bold step taken by Prime Minister Narendra Modi on 8 November 2016 on demonetizing Rs 500 and Rs 1000, Honorable Union Minister of Commerce and Industry Smt. Nirmala Sitharaman addressing a august gathering at Hotel Ocean Pearl on Thursday, 12 January 2017 said, “I emphatically welcome the PM Modi’s and government’s decision to demonetize Rs 500 and Rs 1000 currency notes in circulation in the economy as a bold and revolutionary step, and one that will have a huge impact on the parallel economy in the country. The move has significantly strengthened the government’s systematic efforts, including special investigation team on black money, amending DTAA with countries like Mauritius, Cyprus and Singapore, amending the Benami Transactions Act, and the more recent Income Declaration Scheme – over the last two years to curb black money in the economy”.
She further said, “The main factors taken into consideration before the government took a bold decision on demonetization was to curb black money, and stop the flow of lump sum money into the hands of terrorists, drug mafia, notorious gangs and so on. For many years due to cash transactions, income tax department was not making any revenue- and so the govt. has decided to go cashless/digital transaction systems so that every transactions are recorded/every income is recorded, and thus the business owner is liable to pay the desired tax owed to the Income-tax Department. Through this system, we can have a cleaner economy, cleaner GDP, and also keep an eye on the money holders”.
“The biggest advantage of demonetization is that it helps the government to track people who are having large sums of unaccounted cash or cash on which no income tax has been paid because many people who earn black money keep that money as cash in their houses or in some secret place like under their bed, in toilets etc, which is very difficult to find and when demonetization happens all that cash is of no value and such people have two options one is to deposit the money in bank accounts and pay taxes on such amount and second option is to let the value of that cash reduced to zero”.
“Since black money is used for illegal activities like terrorism funding, gambling, money laundering and also inflating the price of major assets classes like real estate, gold and due to demonetization all such activities will get reduced for some time and also it will take years for people to generate that amount of black money again and hence in a way it helps in putting an end to this circle of people doing illegal activities to earn black money and using that black money to do more illegal activities. Another benefit is that due to people disclosing their income by depositing money in their bank accounts government gets a good amount of tax revenue which can be used by the government towards the betterment of society by providing good infrastructure, hospitals, educational institutions, roads and many facilities for poor and needy sections of society.”
“Demonetization is a deep psychological strike on black money. Demonetization move has killed the very motivation of those people who have the ability to generate black money. A person who had black money has already paid more than the effective tax rate just to convert his black money into legally tender-able currency/assets. Such people are in a state of shock as though they have already paid tax at a higher effective tax rate but still their black money has not got converted into legitimate income. To top it up their wealth has substantially gone down as they have overnight lost more than 50% value in their real estate holdings”.
“Demonetization seeks to bring in a sharp, sudden but long lasting behavior change that encourages electronic payments. That means a lot many transactions would get reported and that would lead to a direct increase in income taxes. Demonetization would lead to generation in employment. The government can now lend massively to infrastructure sector through the recapitalized Public Sector Banks. This would generate a lot of employment opportunities thereby moving more people out of poverty”.
“We have also made an agreement with the Switzerland government to furnish us with the names and details of Indian account holders in Swiss banks – and by 2018 we should get all the details and all the names of the Indian account holders who have illegally deposited money in Swiss accounts which will be publicized through media. Demonetization will also lead to a spurt in economic activity, which will, in turn, push GDP growth to 10 percent. Some economists predicted that demonetization would dampen economic activity over the next two-quarters. But I believe that the decision to scrap high-value banknotes would push GDP growth up by two per cent.”
“There are many types of financial transactions that are not considered as an economic activity. As a result of demonetization, the ambit of economic activity will grow and add to the GDP. If you are moving the informal economy into the formal economy and if the transactions which for years were never reported as part of GDP are now transacted through banking channels, it will only add to the GDP, not reduce the GDP. The point being made is entirely correct. Leave aside for a moment the effects on the money supply and all that. We expect some amount of economic activity which used to exist in the black economy to now, and in future, take place in the white and tax paying economy. Thus, that move from black to white will increase our recorded GDP, the Ministers are entirely correct on this.” added Sitharaman.
MP Nalin Kumar Kateel, Sanjeeva Matandoor- BJP District president and Uday Kumar Shetty- of District BJP wing were also present on the dais. The programme was compered by Umanath Kotian- Dist. BJP General secretary. A brochure named ” Demonetisation-Towards a Cashless Economy (All you need to know about making cashless transactions) compiled and issued in public interest by Krishna J Palemar (former State Minister) was released by Union Minister Nirmala Sitharaman.
