Huge part of economy outside banking system, says Arun Jaitley

FM maintains that the moral ambiguity on tax evasion is not sustainable

Defending the government's move to demonetise high value currency notes, Finance Minister Arun Jaitley on Tuesday said the moral ambiguity about tax evasion that had become "normal" was no longer indefinitely sustainable for a fast growing economy like India.

"A lot of the Indian economy is completely outside the banking and taxation system," Jaitley said at a Times Network event here.

"If this drastic step (demonetisation) had not been taken, things would have gone on in the same way... in terms of society, tax non-compliance, evasion was not being considered morally or ethically improper," he said.

"For a country like India, that has become the fastest growing large economy, is this the kind of model we would like to set... a model that is not indefinitely sustainable," he asked.

India has thus chosen to go through this "50-day transitional period", the Finance Minister said.

"This transitional period between demonetisation and remonetisation of the economy is the period to go for digisation of the economy... from the informal towards formalising of economy," he said.

"This period of digitisation is difficult. You have to have stamina and not allow issues that will crop up to derail your focus," he added.