Union Budget 2017: Finance Minister Arun Jaitley Defends Notes Ban Early In Budget Speech

Finance Minister Arun Jaitley defended the notes ban in the early part of his Budget speech on Wednesday, saying its impact was only transient and not expected to spill to the next financial year.

"Demonetisation is a bold measure against decades of tax evasion," Mr Jaitley said, asserting that it would have an "epoch-making" impact on the lives of people.

There have been deposits of over Rs 80 lakh in 1.48 lakh bank accounts after the notes ban, the finance minister said. The average deposit has been around Rs 3.3 crore.

For many, he said, tax evasion had become a way of life.

"Demonetisation seeks to create a GDP which is bigger, cleaner and real," Mr Jaitley said.

The notes ban was suddenly announced by Prime Minister Narendra Modi on November 8 as a drastic measure to crack down on black or untaxed money. Notes of Rs 500 and Rs 1,000 were devalued overnight, which took away 86 per cent of the cash in circulation and left millions queuing up at banks and ATMs for cash.

The notes ban hit people hard particularly because withdrawals were restricted, there weren't enough new notes in the system and ATMs had not been recalibrated for Rs 2,000 notes.

At the start of the New Year, withdrawal limits were raised and ATM queues eased.

Mr Jaitley quoted Mahatma Gandhi as saying, "A right cause never fails."

"Honouring the honest" was listed among the 10 big themes of the Budget.

Later in the speech, while making his tax announcements, Mr Jaitley remarked: "We are largely a tax non-compliant country. When too many people evade taxes, the burden is on those who are honest and tax compliant."