NEW DELHI, Nov 7:
Taking on former Prime Minister Manmohan Singh for calling demonetisation an “organised loot”, Finance Minister Arun Jaitley said today it was an “ethical drive and moral step” while the “loot” happened under him in 2G, CWG and coal block allocation scams.
The demonetisation decision has led to a larger formal economy, cleaner economy and bigger tax base, Jaitley said, asserting that the Government strongly stands by its decision a year after it made the “historic” announcement, marking an “watershed moment” for the economy.
At a BJP press conference, Jaitley said the party has a different perspective than the Congress on the issue of ethics, as its priority is to serve the nation while for the opposition party it is about serving the family.
On a day Singh launched a withering attack on the Government over demonetisation, saying it had harmed India’s image, Jaitley asked him to compare pre-2014 and post-2014 reputation of Indian economy.
“You were being considered an economy impacted by policy paralysis… You were off the global radar. Today, there isn’t an international agency which does not eulogise the kind and quality of structural reforms India has taken,” Jaitley said.
There was an ethical and moral rationale behind the note ban decision, he said, hitting out at Singh over his loot comments.
“Anti-black money drive is an ethical drive. Anti-black money step is a moral step. What is ethically and morally correct has to be politically correct. The loot had happened in 2G, CWG and coal block allocation,” he said.
Listing out measures taken by the Government to curb black money and corruption, he said Prime Minister Narendra Modi had undertaken a transformation of economy with “structural reforms”.
After coming to power, the BJP believed that it was most urgent to “shake up” the status quo. Excessive cash transaction was leading to tax evasion and honest tax payers suffered “double whammy” as they ended up paying taxes for evaders too, the Finance Minister said.
Demonetisation is not a solution to all problems but it has changed the agenda, ushering in less-cash economy, increasing numbers of tax assessees and squeezing terror funding.
Data mining has led to identification of 1.8 million bank account holders with disproportionate income, he said.
“The Congress has a history of not taking one big step against black money. We are more than satisfied with the direction we have gone (in),” he said.
He parried a question about Raghuram Rajan’s reported stand against demonetisation when he was the RBI Governor, saying he would choose not to answer it as he does not find it necessary to disclose all the facts he as a Finance Minister is privy to.
To another query, Jaitley played down the political significance of Modi’s meeting with ailing DMK patriarch M Karunanidhi in Chennai yesterday, saying political and social courtesies exist irrespective of political alliances.
The BJP has announced it will celebrate ‘anti-black money day’ tomorrow, with its leaders fanning out across the country to highlight the “successes” of demonetisation.
Jaitley hinted at pruning the list of items in the highest GST tax bracket of 28 per cent after revenue in the new regime equalise collections previously.
Under the Goods and Services Tax (GST), implemented from July, over 1,200 products and services have been fitted into one of the four tax slabs — 5, 12, 18 and 28 per cent.
The rates were based on the principle of keeping the total tax incidence at almost the same level before the new indirect tax regime kicked in as also keeping revenue collections neutral.
Jaitley said some of the items should never have been in the 28 per cent slab and the GST Council in the last 3-4 meetings has slashed rates on over 100 items, thereby bringing them down either from 28 per cent to 18 per cent or from 18 per cent to 12 per cent.
“We have been gradually bringing them down. The whole idea is, as your revenue collections neutralise we must prune it and that’s the pattern in which the Council has so far been functioning. I see that as a future guide as far as the Council is concerned,” Jaitley said at the India Today Conclave here.
The GST Council is scheduled to meet on November 10 and may consider lowering tax rates on a host of goods such as handmade furniture, plastic products and daily use items like shampoo.
The Council last month approved an Approach Paper to be followed by the fitment committee while deciding on future rate revisions.
A top Government functionary said the idea is to have two GST slabs besides one of 28 per cent for some luxury items.
While the entry slab will remain at 5 per cent, the Government envisions merging 12 per cent and 18 per cent slabs into one in future, he said.
Going for two slabs in the initial stage would have been inflationary, he said, adding that items in 28 per cent slab would be thinned out gradually.
He, however, did not put any timeline to these moves.
Jaitley said consumers are noticing the tax paid on goods they buy in the GST regime as previously excise duty was embedded in the price of the product.
The GST regime has subsumed more than a dozen central and state levies including excise duty, service tax and VAT.
Jaitley said the product, in the previous regime, “didn’t show you are paying so much excise (duty)”. (PTI)