Terming demonetization as “bold and decisive” measure, Finance Minister Arun Jaitley today said it will have a multiplier effect on the economy and will create bigger, cleaner and real GDP.
“We are moving from informal to formal economy and the government is now seen as a trusted custodian of public money,” he said while delivering the Union Budget 2017-18.
Demonetization was a bold and decisive strike in a series of measures to arrive at a new normal of bigger, cleaner and real GDP, he said, adding that it has only a transient impact on the economy and the long term benefit include higher GDP growth and tax revenue.
On November 8, 2016, the government had announced demonetization of old Rs 500 and Rs 1000 notes to crack down on black money and move towards a ‘less cash’ society through digital payments.
Jaitley said the government has taken a series of measures to eliminate black money and curb corruption and demonetization was a step in that direction.
Demonetization will help in the transfer of resources from tax evaders to government, he said.
He further said that the pace of ‘remonetization’ has picked up and the situation will soon normalize.
Expressing hope that there will be no spillover effect of demonetization next fiscal, the Finance Minister said the surplus liquidity in banks will lower the borrowing and the lending rates.
The government would continue with the economic reforms to benefit the poor, he added.