At Vibrant Gujarat, Arun Jaitley Says 'Excessive Paper Currency Has Its Vices'

Gandhinagar: Union Finance Minister Arun Jaitley today pointed to some unexpected upsides of the currency ban today while addressing a session at Vibrant Gujarat 2017, India's biggest investors' summit, on the progress of the government's flagship Goods and Services Tax or GST.  

Amid reports of a slowdown in certain sectors in the aftermath of the government's decision to abolish 500 and 1,000 rupee notes, Mr Jaitley said, "Excessive paper currency has its own vices, leads to its own temptations. We have seen its impact in India''.

"Difficult decisions initially pass through difficult phases. Historic decisions have temporary pain attached to them," the minister further said, referring to the government's November 8 announcement banning 500 and 1000 rupee notes to root out corruption and stop terror financing.

The landmark GST and the notes ban will "boost growth" and their impact will be seen this year, the finance minister said. "After transient impact, demonetisation will lead to cleaner and larger GDP."

Economists have slashed growth forecasts to about 6.4 per cent for the new financial year that starts in April -- a slide from the current over 7.5 per cent. Mr Jaitley, however, has dismissed reports of economic disruption, saying tax collection has increased substantially over last year.

Today, the minister expressed confidence that the contentious issues in the GST, over which the Centre and the states are locked in argument, will be resolved in the next few weeks and the landmark tax reforms will meet the April 1 deadline for rollout.

"Most of the issues have been sorted out, some critical issues remain and these critical issues over the next few weeks we will try and solve out," Mr Jaitley told investors at the Vibrant Gujarat Summit.

Reserve Bank Governmor Urjit Patel later attended a session on International financial centres, but refused to touch upon the demonitisation issue. Instead, he focused broadly on how effective international financial centres can be. Prime Minister Narendra Modi had inaugurated the country's first International financial centre few days ago in Gandhinagar.