Jaitley hits back at Manmohan, says demonetisation not one-stop solution

New Delhi, Nov 7 (IANS) Finance Minister Arun Jaitley on Tuesday rejected former Prime Minister Manmohan Singh's charge that demonetisation was "organised loot" and said there was an ethical and moral rationale behind the decision which gave a "new direction" to the economy.

Defending the government's decision to demonetise high value currency notes last year as "historic" Jaitley also said that demonetisation cannot be a one-stop solution to clean up all corruption.

Addressing the media on the eve of the first anniversary of the note ban decision, Jaitley said there was a policy paralysis during the 10 years of UPA rule and they did not even take a single decision to curb corruption while Prime Minister Narendra Modi made structural reforms and took decisions which changed the scenario.

"It is surprising that an economic exercise behind which there is ethical and moral rationale is being described as loot. An anti-black money drive is an ethical drive and anti-black money step is a moral step. What is morally and ethically correct has to be politically correct," he said.

He said that loot is something that happened in 2G, CWG and coal block allocation scams.

"I feel that even on the matter of ethics our vision and Congress' vision are different. Their primary object is to serve the family and our primary object is to serve the nation. Even on these, preliminarily we may not be able to agree," he said.

Jaitley was responding to former Prime Minister Manmohan Singh's criticism in Ahmedabad on Tuesday that the "twin blow" of demonetisation and the "badly-designed" and "hastily-implemented" Goods and Services Tax (GST) was a "complete disaster" for India's economy.

Manmohan Singh, in his address to small businessmen and traders, said the move was a "black day for our economy and indeed for our democracy".

"All that Dr. Singh is to do is to compare the relative credibility of Indian economy internationally pre 2014 and post 2014. Pre 2014 you are being considered as an economy impacted by a policy paralysis where the alphabet 'I' was being threatened to be knocked off out of the BRICKS. You were off the global radar," he said, adding that many international agencies today praise the kind and quality of reforms India is making.

Jaitley said that if India wanted to be a developed nation then a less-cash economy, a formal economy and a cleaner economy is a must.

Dubbing the demonetisation decision as historic, he said the highly criticised decision of note ban was not a one-step solution to curb corruption.

"Demonetisation is not a one-stop solution to end corruption. It cannot be, but it did change the agenda. And that changed agenda is that we should go towards less-cash economy. Individual tax payers' number has increased, digital transactions have gone up and terror funding has squeezed," Jaitley said.

The Finance Minister said he was "more than satisfied" with the new direction the economy is moving in.

"We at BJP believe that for the nation's economy and its future, it was necessary to change the status quo. Domination of cash in any economy, especially having 86 per cent of currency as high denomination notes, and excessive cash transactions lead to tax evasion. In such cases the taxpayers have to bear the burden of the evaders too," Jaitley said.

He said it is unjust that resources meant for the country's development and welfare of the poor should be kept in rich people's coffers. He said that though corruption will not end even in a less-cash system it will become difficult to indulge in corruption.

He said that demonetisation was definitely a watershed movement and one of its important objectives was to make India a less cash economy and thereby reduce the flow of black money in the system.