New Delhi: Calling the demonetisation of high-value banknotes a game-changer, members of Parliament (MPs) belonging to the ruling Bharatiya Janata Party (BJP) on Tuesday lined up behind Prime Minister Narendra Modi, who is under attack from opposition parties.
A meeting of the BJP parliamentary party passed a resolution supporting it as a key move to curb black money and terrorist funding.
The backing for the PM comes at a time when Parliament is deadlocked with the opposition parties demanding a roll-back of the 8 November move, which has led to a shortage of cash crunch in parts of the country.
Addressing the meeting chaired by Modi, finance minister Arun Jaitley assured MPs that the situation was returning to normal in urban areas and the government was poised to take fresh initiatives to step up the supply of money in rural areas.
Jaitley went on to explain the impact of partial demonetisation. “Very few decisions taken by the government have this kind of economic, social and political impact, like this move. That is why it has been welcomed by the people as it now puts a premium on honesty,” Jaitley said. “If a system gets established where everyone honestly pays their taxes, imagine the impact on the tax revenues and subsequently on the fiscal deficit. The PM has tried to create a new normal through this radical step. Many talked about this but no one had the guts to implement such a drastic decision.”
The finance minister held out an assurance that the government was proactively responding to challenges faced across the country.
“In the next few days, the focus will be on rural areas so that farmers have enough funds because it is rabi sowing season. A few decisions were taken Monday night which will be made public,” he said.
The official announcement is likely on Wednesday.
Jaitley acknowledged that businesses have been affected. “Demonetisation may impact business, but it will only be a short-term impact. In a calibrated way, the money will be infused into the banking system,” he said, adding, “When remonetization will reach a reasonable level, the restrictions will be removed. Businesses will start functioning normally.”
Jaitley also sought to highlight how a rise in tax revenues could help the government spend more in the rural sector and help reduce poverty. He also pointed out how this move will bring down the cost of funds for banks and ensure increased lending to key sectors at low interest rates.
Senior leaders of the party argued that there was a malicious attempt by political parties to provoke violence. “BJP condemns malicious efforts by some political parties who are desperate to provoke violence and chaos, having been rattled by widespread support by the people to the government’s initiative..,” said M.Venkaiah Naidu, information and broadcasting minister.
“Finance minister Arun Jaitley has spoken at length to convey to party MPs that this move of the government is pro-people. The fact is that people continue to face hardships...,” said Abhay Kumar Dubey, New Delhi-based political analyst associated with the Centre for Study of Developing Societies.