RBI’s Monetary Policy Committee (MPC) member Ashima Goyal has attributed the increase in tax collections to demonetisation and said it will help the country move towards an ideal situation where lower taxes are levied on a large basis.
On November 8, 2016, Prime Minister Narendra Modi announced the demonetization of old Rs 1,000 and Rs 500 notes and one of the major objectives of the unprecedented decision was to stop the flow of black money and promote digital payments.
Noting that demonetisation had short-term costs but some long-term benefits, Ashima Goyal said it increased digitization and formalization in the economy and reduced tax evasion, though all this has to go ahead.
“It has contributed to the boom in taxes that the country is benefiting today. This helps us move towards the ideal of lower tax rates on a larger basis,” he said.
The tax department said on October 9 that the gross collection of tax on corporate and personal income in the current financial year has so far increased by almost 24 per cent to Rs 8.98 lakh crore.
GST collections remained above Rs 1.40 lakh crore for the seventh consecutive month and stood at Rs 1.47 lakh crore in September, which is 26 per cent higher than the previous year, indicating a jump in tax collections.
However, earlier this month former Congress president Rahul Gandhi said the BJP’s policies of demonetisation, GST and agricultural laws are weapons for India’s poor and small businessmen.
Responding to a question on Central Bank Digital Currency (CBDC), Ashima Goyal said that the CBDC aims to reduce the use of cash and provide additional functions rather than replace the existing payment system.
“CBDCs can certainly meet new needs in the digital age, reach remote areas and drive financial inclusion, and save costs as cash is expensive and cumbersome,” he added.
Recently, the Reserve Bank said that it will soon launch a pilot launch of e-rupee for specific use cases to strengthen India’s digital economy, make payment systems more efficient and check money laundering.
In a concept note on Central Bank Digital Currency, RBI said that the CBDC is intended to complement rather than replace existing forms of currency and is envisaged to provide users with an additional payment avenue and not to replace existing payment systems. For.
CBDC is a digital form of currency notes issued by a central bank. While most central banks around the world are exploring issuance of CBDCs, the major motivation for its issuance is specific to the specific needs of each country.
To a question on India’s rising trade deficit, Ashima Goyal said there are several policy levers available to reduce the deficit, including short-term measures including exchange rate depreciation and reducing aggregate demand.
According to him, more emphasis should be placed on long-term sustainability-support measures such as reducing oil intensity as well as reliance on energy imports and encouraging exports.
Ashima Goyal suggested that the best export promotion is enhancing the competitiveness of Indian industry by reducing the cost and difficulties of doing business here.
India’s trade deficit widened to US$ 26.72 billion in September, while exports declined 3.52 per cent to US$ 32.62 billion.
(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)