Arun Jaitley lists three gains from note ban

New Delhi: Increase in volume of digital transactions, widening of tax base and squeezed circulation of high denomination currency were the real measures of success of demonetisation, Finance Minister Arun Jaitley said on Monday.

The success of the November 2016 note ban came under attack after the Reserve Bank of India (RBI) revealed that almost 99 per cent of the banned currency had returned to the banks.

"Some circles have lack of understanding and measure success of demonetisation with only how much money reached banks," Jaitley said here at the launch of Google`s new digital payment app -- Tez.

"I have three red lines to measure success of demonetisation. First, how much volume of cash that RBI prints are we able to squeeze over time. High denomination currency has already squeezed in terms of volume. 

"Second test is that as its (demonetisation`s) consequence, how many assessees are we able to add and expand tax base."

The third measure would be the increase in digital transaction volumes, he added.

These three would remain the test of success of demonetisation, which both in the medium and long term would see an advancement in the positive direction, the minister stated.

"Lot of people at that time went for digital payments more as a compulsion rather than because it was easier. We reached a peak (of digital transactions), then slipped marginally and now we will pick up again," he said.

He added that with the technological evolution, the Google`s app was perhaps the simplest way of monetary transactions.

Jaitley said the Google`s new digital payments app over the next few months was likely to make major advances in digital transaction volumes.

Built on the Indian government-supported Unified Payments Interface (UPI), Tez allows users, free of charge, to make small or big payments straight from their bank accounts. 

The app was built for India, working on the vast majority of the country`s smartphones and available in English and seven Indian languages (Hindi, Bengali, Gujarati, Kannada, Marathi, Tamil and Telugu).

The app works in partnership with four Banks -- Axis Bank, HDFC Bank, ICICI Bank and State Bank of India -- to facilitate the processing of payments across over 50 UPI-enabled banks.

Jaitley said the idea of Tez was discussed by Google`s India-born CEO Sundar Pichai in January, just after demonetisation. 

"Google saw a great potential in Indian economy and businesses," he said.

Jaitley noted that the need for finding alternatives to high cash was never an issue seriously debated in the government earlier and the people got in the habit of living in a high-cash economy with low tax base as a normal practice.

Thus, demonetisation was a shock, waiting to happen and India had seen the debate over it evolve, he added.