GST, demonetisation will change India's economic environment: Jaitley

Hailing the Goods and Services Tax (GST) and demonetisation move initiated by Prime Minister Narendra Modi-led government as economic game changers, Union Finance Minister Arun Jaitley on Thursday said there is an atmosphere filled with enthusiasm as it is for the first time in the history of this country that an honest person is thinking that there are benefits of being honest.

Jaitley, who was speaking here at the seminar on 'Indian Economy-The New Norm', said the GST will ensure higher taxation as far as the Centre is concerned and also higher taxation for states.

In the wake of the escalating opposition attack on the government, he also rejected all apprehensions of the Indian economy suffering due to demonetisation.

"It is first time in the country that all honest citizens are feeling the advantage of being honest," Jaitley said.

"The effect of demonetisation will remain for one or two quarters, but its effect on the economy will be seen in the long-term," he added.

Praising Prime Minister Narendra Modi, the Finance Minister said it takes a lot of courage to implement such steps.

"Prime Minister Modi has created a new normal in the country where there will be less cash and more of digital currency transactions," he added.

Jaitley further said that paper currency would reduce with this step, but digital currency would find growth.

"We are half way through our term, and the Prime Minister took two tough jobs since coming to power, one was demonetisation and the other was GST. When both are implemented people of the country will see the positive difference in the economy of the country," he said.

He also said that as far as currency changes are concerned, the size of the GDP as well as tax base will significantly expand in the long run.

The Finance Minister said demonetisation is a huge step to swap 86 percent of currency of the nation.

"The hidden currency comes out, which also includes fake currency, money which is used to carry out criminal activities, money which is used by terrorist organization. It is a very bold decision," he added.

Jaitley also pointed out that this step initiated by the government has strengthened the banks.

"Ability of the banks to support the economy was decreasing and then to strengthen the banks we used to contribute from the budget," he said.