Demonetisation: States raise Concerns over Ban on Old Rs 500 and 1000 Currency Notes and its impact on State Treasuries

New Delhi, Nov 20, 2016: A number of states- including West Bengal, Uttar Pradesh and Tamil Nadu, today have raised the issue of demonetization of 500 and 1000 rupee notes and its impact on state treasuries along with the day-to-day sufferings of lower and middle classes related to this decision with Union Finance Minister Arun Jaitley.

Before the start of the informal meeting that was called to end the deadlock over jurisdiction over assesses under the GST regime, sources said, West Bengal Finance Minister Amit Mitra said the ban on old currency notes would trigger recession as the industrial activity would be hurt and tax collection would recede, mentioned PTI.

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Apart from other states, Tamil Nadu has also joined the group saying that the industrial activity is affected and while Uttar Pradesh mentioned that the factories in Kanpur as well as in Moradabad have closed operations.

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Thomas Isaac, Kerala Finance Minister said that numerous states have "reported informally" that they have seen a "significant decline in revenues". "If 86 per cent of your money disappears, there is a problem for the people. There is a collateral impact on investments sentiments," Isaac told reporters.

According to the PTI report, in a major assault on black money and terror financing, Prime Minister Narendra Modi on November 8 announced demonetisation of 500 and 1,000 rupee notes and asked holders of such notes to deposit them in bank accounts.

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As much as Rs 14 lakh crore or 86 per cent of India's currency has been withdrawn and is getting replaced with new Rs 500 and Rs 2,000 rupee notes.

All states were in agreement that their revenues will get impacted as well as the employment will be hit, but nobody demanded a roll back, mentioned sources.

While West Bengal Chief Mamata Banerjee and Delhi CM Arvind Kejriwal have been demanding a roll back of demonetisation exercise, Samajwadi Party supremo Mulayam Singh Yadav demanded a short-term roll-back of demonetisation move saying that people should be given at least a week's time before the ban on old currency notes.

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Even though many leaders are against the PM Narendra Modi's demonetisation move, the common folks are supporting PM Modi's masterstroke move towards curbing illegal money problems in a large manner, mentioned PTI. Let's just say, this issue has both positive and negative effects and more debates about the necessity of a huge decision like this will follow.

– by NewsGram with PTI inputs