Demonetisation will lead to growth in formal economy: Amit Shah

BJP president Amit Shah on Saturday defended the Narendra Modi government’s economic policies, including the controversial demonetisation decision, and said that steps such as cleaning of books of banks and tackling non-performing assets (NPAs) as well as transparent auction of resources such as coal and spectrum is laying the foundation for an inclusive and sustainable growth.

Shah, speaking to business leaders at a special session organised by industry chamber Ficci, said that the Modi government has taken steps to ensure that social sector benefits are adequately distributed to the poor and that leakages in subsidy – “rampant during the previous Congress-led UPA regime” — is plugged.

He said not much should be read in the recent weak quarterly (April-June) GDP numbers of 5.7%, and said that the economy is poised for a strong showing in the long-run on account of various reforms and other socially-relevant measures that would benefit the poor and the country at large.

Delving specifically on the issue of demonetisation, whose intended benefits have always been under debate especially after the RBI said that the majority of the cancelled currency flowed back into bank accounts, Shah said, “We have taken some steps due to which we had to face severe criticism, and there has been some anguish. But I want to make it clear that the Modi government does not believe in taking decisions just to please people, but we take decisions that will be for the benefit of people.”

Demonetisation, he said, will help tackle black money and facilitate the movement of black money — stashed illegally – into the formal economy. “There have been many debates on this, especially after the release of numbers by the RBI. I strongly believe that due to demonetisation, there will be a growth in formal economy. You need to accept that. Wherever the money was, now it is a part of the formal economy. Income tax officials will try and fix accountability for some of this money. However, money that was hidden in lockers and stashed illegally will now be used for the country’s economic growth.”

Shah said that the BJP government does not believe in reforms which will just garner votes from the public. “We have not linked policy-based decisions with vote-bank politics. It may be possible that we may suffer some political setbacks due to this at some points in time. However, we have diligently decided to move ahead with decisions that are in the favour of the country’s economic growth. Demonetisation is one of the biggest example of this.”

The BJP president was also highly critical of the previous Congress-led government and said that its tenure had seen a fall in economic growth even as fiscal deficit, inflation and foreign currency reserves suffered.

“The investment climate was bad, and that government was known for policy paralysis. Every Minister in the previous government thought of himself as the Prime Minister, while the Prime Minister was not seen as the Prime Minister.”

He said there were a number of scams during the previous regime, and nearly Rs 59,000 crore worth of subsidy for the poor was not sent to those it was originally meant for. “This was not even captured by the CAG.”

He said that the Modi government has been working towards guaranteeing sanitation, road connectivity, and electricity to all the sections of the society, especially in the under-developed rural areas.

Also, initiatives such as ‘Pragati Programme’ have been taking care of giving back energy to stalled economic projects and even Prime Minister Modi leads many of these initiatives.
Speaking about the GST, he said that it had been a bold and ambitious move of the Modi government and will help in having ‘One Nation, One Tax’ regime. “This will ensure uniform growth for all the states and will also help them become more competitive.”

On the efforts to clean the books of banks and tackle the resultant NPAs, Shah said the government wants to end the “jugglery of balance sheets”.
“There can be some temporary problems due to this, but it will help our banks in the coming years.”

The BJP president said that the “biggest achievement” of the Modi government has been that it “changed the scale of thinking” of governance.”