“The steps that the government had taken were the right steps which were being implemented in the right manner. As far as the Indian economy is concerned, including on India’s GDP, it is going to be a positive impact,” the Minister told reporters in the Parliament House precincts while responding to queries over the impact of the government’s move to demonetise Rs 500 and Rs 1,000 currency notes.
Jaitley said there will be a positive impact “because a lot of money that operates in the shadowy economy will now become part of the banking structure” and banks “will have a lot more money to support the economy”.
The Finance Minister also said that “the private sector investors which were so far lacking will now get back into the economy”.
“The banks which were struggling because of the NPA (non-performing assets or ‘bad loans’) problem, will now have a lot more money to lend for agriculture, infrastructure, and social sector, as also for trade and industry.”
He said the possibility of banks having low-cost funds now available to lend would lead to lowering of interest rates.
“Additionally, when more and more transactions will come into the banking network in the long run, you will find direct and indirect improvement. And, therefore, over a medium- and long-term, there will be a positive impact on the economy,” he said.
“I thing it would be proven for any economy to really look beyond the immediate impact when the demonetisation process is on and look at India post-remonetisation,” he observed.