Finance Minister, Arun Jaitley on Tuesday said that the government will announce more steps to ease the cash crunch in rural areas.
“The situation is normalising in the urban areas. In the next few days, the focus will be on the rural areas so that farmers have enough funds because it is rabi sowing season. Few decisions were taken yesterday (Monday) night which will be made public,” Arun Jaitley said while addresing parliamentary party meeting of the Bharatiya Janata Party (BJP).
Explaining all aspects of the move, Finance Minister said, “Demonetisation has direct relation with poor, with poverty and with poverty alleviation” and said once the replacement of currency reaches a reasonable level, the restrictions will be eased.
Jaitley said that the country annually borrows ₹4-5 lakh crore and after this move and these funds can be used for public spending for development of rural areas and uplift of poor.
About ₹8 lakh crore will be collected from income tax this year and ₹8.5 lakh crore from indirect tax but despite that another ₹4-5 lakh crore is required to bear expenses for running the country, he said.
“..so if the honest tax paying system establishes in the country…then do we need to borrow money…and in the case these borrowings of about ₹4-5 lakh crore annually can be utilised in rural areas for poverty alleviation and other similar measures,” Jaitley added.
Terming the decision as historic, he said that Modi with his courageous step has created a new normal of white transactions.
“…what was normal from last 70 years that this much in cash and this much in cheque… but now Prime Minister has created a new normal,” he said.
“Today every honest citizen feels that a premium has been given for his honesty. In long term this landmark step will increase the size of official economy and reduce the shadow economy,” he said.
Giving rationale behind this move, the Finance Minister said in developed countries currency is normally 4 per cent of GDP but in India it is 12 per cent of the GDP.
Taking a dig at Rahul Gandhi, Jaitley said on the one hand the Congress leader says the demonetisation decision was selectively leaked to BJP top brass and on the other he claims “that even Finance Minister, that means I, was also not aware”