‘We Are Creating A New Economy For India’

Union minister of state for civil aviation Jayant Sinha points to the series of poll victories for the Bharatiya Janata Party (BJP) in the states as proof of the people’s backing for the the Modi government’s demonetisation exercise. Excerpts of a conversation with BW Businessworld’s Chahat Jain:

Would you say that demonetisation has been accepted by the people of India?
Demonetisation has been received with tremendous enthusiasm and acclaimed by the people of India and that has been demonstrated clearly in the election results where we won, with sweeping victories in Gujarat and Maharashtra. We have done very well in West Bengal and in Madhya Pradesh. So the people of India are very happy that corruption, black money, counterfeit currency — all these issues — have been addressed through the demonetisation exercise — and everybody is hailing it as a masterstroke.

How will demonetisation help curb black money and corruption in the system?
We are creating a new economy for India - a new normal for India and in this new normal, corruption is going to come down, counterfeit currency is going to come down, and we have already seen that drug smuggling, terrorism, all of that has come down and what we’re going to have is an economy that is a lot more compliant when it comes to taxes. Tax collections are going to go up, our banks are going to find that they’re in a much better situation and at the same time, some of the black money that will not come back and will not be back in circulation, can be used – as the Prime Minister has already said – for the Pradhan Mantri Kalyan Yojana, to go directly back to the people, so they may benefit from it.

Do you see India moving towards a digital economy?
Digital India is not a distant dream at all! As Nandan Nilekani has said in a television programme, what this whole process is doing is, accelerate the creation of a digital economy in three to five years. So, the economy will leapfrog into a state where there will be a lot more digital usage.
Nobody is saying that cash will not be used. Of course, we will use cash, but we will use less cash and as we use less cash and as people are much more willing to declare their unaccounted income, (we are) planning to have an economy that is a modern 21st Century economy that functions much better.

How will demonetisation impact the GDP?
It’s too early to understand exactly what the impact on the economy will be and it’s likely, that this quarter there may be somewhat of a slowdown in GDP growth, which many economists are saying could range from 0.5 per cent to two per cent. But again, I myself am not sure exactly what will happen, because I think in most cases, all that has happened is that we have deferred consumption as soon as sufficient cash (is available) and that turns into the system. Consumption will come back up to normal levels (and that) will be a bit of a catch-up phase. So, what we might lose in this quarter will certainly pick up in the next quarter.