Demonetisation increased digitization and formalization in the economy and reduced tax evasion, said Ashima Goyal
Demonetisation increased digitization and formalization in the economy and reduced tax evasion, said Ashima Goyal
RBI’s Monetary Policy Committee (MPC) member Ashima Goyal has attributed the increase in tax collections to demonetisation and said it will help the country move towards an ideal situation where lower taxes are levied on a large basis.
On 8 November 2016, Prime Minister Narendra Modi announced Demonetization of old ₹1,000 and ₹500 notes And one of the major objectives of this unprecedented decision was to curb the flow of black money and promote digital payments.
Noting that demonetisation had short-term costs but some long-term benefits, Ms Goyal said it increased digitization and formalization in the economy and reduced tax evasion, although this is all to go further.
“It contributed to the boom in taxes that the country is benefiting today. This helps us move towards the ideal of lower tax rates on a larger basis,” he said. PTI,
The tax department on October 9 said that the gross collection of tax on corporate and personal income has increased by almost 24% to Rs 8.98 lakh crore in the current financial year so far.
GST collections remained above Rs 1.40 lakh crore for the seventh consecutive month and stood at Rs 1.47 lakh crore in September, a 26% increase over the previous year, reflecting a jump in tax collections.
However, earlier this month former Congress President Rahul Gandhi had said that the policies of the BJP Demonetisation, GST and agriculture laws are weapons for India’s poor and small traders,
Responding to a question on Central Bank Digital Currency (CBDC), Ms Goyal said that the CBDC aims to reduce the use of cash and provide additional functions rather than replace the existing payment system.
“CBDCs can certainly meet new needs in the digital age, reach remote areas and drive financial inclusion, and save costs as cash is expensive and cumbersome,” he added.
Recently, the Reserve Bank said that it will soon launch a pilot launch of e-rupee for specific use cases to strengthen India’s digital economy, make payment systems more efficient and check money laundering.
In a concept note on Central Bank Digital Currency, RBI said the purpose of CBDC is complementaryRather than replace existing forms of currency and is envisaged to provide users with an additional payment opportunity, not to replace existing payment systems.
CBDC is a digital form of currency notes issued by a central bank. While most central banks around the world are exploring issuance of CBDCs, the major motivation for its issuance is specific to the specific needs of each country.
To a question on India’s rising trade deficit, Ms Goyal said there are several policy levers available to reduce the deficit, including exchange rate depreciation and reducing aggregate demand.
According to him, more emphasis should be placed on long-term sustainability-support measures such as reducing oil intensity as well as reliance on energy imports and encouraging exports.
Ms. Goyal suggested that the best export incentives are enhancing the competitiveness of Indian industry by reducing the cost and difficulties of doing business here.
India’s trade deficit widened to $26.72 billion in September, while exports declined by 3.52% to $32.62 billion.