Opposition parties including the Congress, CPI-M and AAP on Wednesday questioned the decision to demonetise Rs 500 and Rs 1000 notes while the government said that tax collections will go up considerably in the medium-to-long term as more people will come under the tax net due to the move.
The Communist Party of India-Marxist dubbed the move as "posturing" while the Aam Aadmi Party described it as a "Tughlaki farman" of the government.
Congress Vice President Rahul Gandhi questioned the move asking how replacing Rs 1,000 notes with Rs 2,000 notes was going to help fight black money while former Finance Minister P. Chidambaram supported the move but raised issues about its implementation.
However, defending the move, Union Finance Minister Arun Jaitley said: "In the medium and long term, direct and indirect tax collection will increase. Lot of currency outside the banking system perforce will have to get into the system."
"But how much currency in the market comes back into the banking system, we will come to know only with time," he said at a press briefing, adding that he expected the supply of high denomination currency notes to stabilise in three-four weeks.
In a surprise move, the government on Tuesday announced that Rs 500 and Rs 1,000 currency notes were being demonetised. Instead, new notes of Rs 500 and Rs 2,000 denomination will be issued.
Jaitley said the step by the government to crack down on black money, terror financing and corruption not merely nudges the economy towards a cashless society but is a significant push in that direction.
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The parallel economy running outside the banking system, which was thriving on black money, has consequences like tax evasion and tax non-compliance and will be replaced by the real economy, Jaitley said.
However, Gandhi attacked the move.
"Once again Mr Modi shows how little he cares about ordinary people of this country - farmers, small shop-keepers, housewives - all thrown into utter chaos.
"While the real culprits sit tight on their black money stashed away abroad or in bullion/real estate. Well done Mr. Modi.
"One question for the PM: How is replacing 1,000 rupee notes with 2,000 rupee notes going to make black money hoarding a lot harder?" he said in a series of tweets on his official account.
Congress leader Chidambaram supported the move but stressed that 99 per cent people are legitimate holders of money and the government must "quickly, efficiently" exchange their money without causing any harassment.
He also said if housewives, students and small traders are made to fill up RBI forms, then it'll be pure harassment, and Congress will condemn it. He said the introduction of the Rs 2,000 note was a "puzzle".
"Replacement of old notes by new notes should be done quickly, efficiently and with the least inconvenience to the people, especially the poor, the middle class, the farmers, the daily-wage earner, the small traders and businesspersons, the students, the self-employed and the housewife.
CPI-M leader Prakash Karat criticised the decision terming it "posturing" to divert people's attention from the government's failures.
"This is just a political posturing to hide the failures of the government.
"This decision has caused a lot of disruption in the life of the common people. The Modi government has not addressed the sources of black money and did nothing to check them. There are certain sectors, which are the sources of black money, like real estate," he told media here.
The Aam Aadmi Party termed the demonetisation as a "Tughlaki farman" - (Tughlak's diktat) and said the move was made to save big businessmen who hold black money.
"(Prime Minister Narendra) Modi ka tughlaki farman kisaanon, gareeb aadmi ke peet pe hathoda hai (Modi's directive is a blow to the farmers and poor)," AAP leader Sanjay Singh told reporters here.
"With this decision, the whole country is in panic. This government does not want to catch big defaulters and people who have black money in their Swiss accounts but only wants to trouble the common man," Singh added.
--IANS
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