Scrapping Rs 500 & Rs 1,000 notes has worried people with black money: Arun Jaitley

FM Jaitley said that political funding would also be impacted by the move

A day after the government announced scrapping existing Rs 500 and 1,000 currency notes from Tuesday midnight onward, Finance minister Arun Jaitley said people with black money are worried. He also said political funding would be impacted by the move too.

"It pays to be honest," Jaitley said.

He clarified that there is no immunity scheme and all deposits of old Rs 500 and Rs 1,000 in bank accounts will be subject to tax laws.

As the Sensex crashed over three per cent, finance secretary Ashok Lavasa said the market would have reacted to several other developments. "Let us wait and watch how things pan out," he said.

Though he did not specify, but experts said markets reacted to results of US elections as well which showed Republican candidate Donald Trump is on his way to win the four-year lease on the White House.

The finance secretary said, "If there is anything required to be done by market regulator SEBI, I am sure it will take a look and take appropriate decision at the right time."

He said bigger notes of Rs 2,000 are being brought in and the Reserve Bank of India will strictly monitor it.

"The government's intention is to move towards cashless transaction," he added.  

"I think people do understand the objective behind this and I am sure they will cooperate in dealing with the difficulties and inconvenience that they might face. And eventually, things will settle down," Lavasa said.

He allayed fears of the impact of the move on economic activities, saying, "I think economies grow not on the strength of illegal money."

Revenue secretary Hasmukh Adhia said, "We will encourage people to deposit all their money, how we deal with that cash, how we sort of take it into income tax, that we will see."

Chief Economic Adviser Arvind Subramanian said, "we will see the benefits in the medium term probably."