Presenting the Union Budget 2017-18 in Parliament, Finance Minister Arun Jaitley has expressed his confidence that slowdown in economic activity on account of demonetisation was only temporary and its effect would not spill over to the next financial year. He also said that like all reforms, this measure is obviously disruptive, as it seeks to change the retrograde status quo.
Describing demonetisation as bold and decisive measure, the Minister said that the move has a strong potential to generate long term benefits in terms of reduced corruption, greater digitisation of economy, increased flow of financial savings and greater formalisation of economy. He also said that it would eventually lead to higher GDP growth and tax revenues.
Finance Minister has said that there is early evidence of an increased capacity of banks to lend at reduced interest rates and a huge shift towards digitisation among all sections of society. He noted that the surplus liquidity in the banking system, created by demonetisation, will lower borrowing costs and increase the access to credit and added that this will boost economic activity, with multiplier effects. He also said that tax evasion had become a way of life and had bred a parallel economy, which demonetisation aimed to change.