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Demonetization will help increase government revenue, lower fiscal deficit: Jaitley

Finance Minister Arun Jaitley on Sunday expressed hope that demonetization will help increase government revenue and lower fiscal deficit, leading to higher expenditure on defence and rural infrastructure. With the junking of the old high-value currency, the parallel economy has become part of the formal system, which leads to higher accountability and taxation that boost economic growth and transparency, he said at the launch of Digi Dhan Mela in New Delhi.

He illustrated this point by saying that shifting towards less cash economy will help bridge fiscal deficit and bring about improvement in rural India. The government will pass on lesser burden to the posterity if the fiscal deficit is lower, he added. At the same time, it will augment capability of administration, increase defence expenditure and improve spending on the poor. The government aims to bring down fiscal deficit to 3.99% of GDP this fiscal. Anonymity of money is gone with demonetization as the money has come into the banking framework and becomes part of the formal system leading to strengthening of banking, he said.

The banks, in turn, can extend more loans and help build a better economy, Jaitley added. Earlier in the day, Prime Minister Narendra Modi unveiled two schemes — Lucky Grahak Yojana and Digi Dhan Vyapaar Yojana — for customers and traders alike to promote mobile banking and e-payments. A total of 15,000 people will get rewards as Christmas gift through a draw, whereby each of them will have Rs 1,000 in their accounts.

“Starting today, this scheme will continue for the next 100 days. Everyday, 15,000 people are going to receive rewards of Rs 1,000 each. In the next 100 days, lakhs of families are going to receive crores of rupees as gift, but you will be entitled to this gift only if you make use of mobile banking, e-banking, RuPay card, UPI, USSD – such means and methods of digital payment,” Modi said. In addition, there will be a grand draw once every week for such customers in which the prize money will be in lakhs of rupees. On April 14, on the occasion of birth anniversary of Dr Baba Saheb Ambedkar, there will be a mega bumper draw where rewards will be in crores of rupees.