Demonetisation 'key step' to formalise the economy, says Arun Jaitley defends noteban

New Delhi, Nov 8: As India completes two years of demonetisation today, Finance Minister Arun Jaitley has once again come out in support of the exercise explaining how the noteban by the government helped in formalising the economy. Arun Jaitley said that demonetisation helped in tackling black money and expanding the tax base.

''Demonetisation is a key step in a chain of important decisions taken by govt to formalise the economy. Govt first targeted the black money outside India. Asset holders were asked to bring this money back on payment of penal tax,'' Arun Jaitley wrote in a blog.

Arun Jaitley also said that the collection of both personal and corporate income tax increased as a result of demontisation.

He also said,''Those who failed to do so are being prosecuted under the Black Money Act. Details of all accounts and assets abroad which have reached the Government resulted in action against the violators.''

''Demonetisation compelled holders of cash to deposit the same in the banks. The enormity of cash deposited and identified with the owner resulted in suspected 17.42 lakh account holders from whom the response has been received online through non-invasive method,'' he also said.

''The violators faced punitive actions. Larger deposits in banks improved lending capacity for the banks. A lot of this money was diverted to the Mutual Funds for further investments. It became a part of the formal system,'' he added.