Demonetisation was a watershed moment: Jaitley

The eve of the first anniversary of demonetisation saw the government selling the idea as a "watershed moment" while the main opposition Congress reiterating it stance as "an organised loot and legalised plunder".

Finance Minister Arun Jaitley defended the November 8, 2016 note ban saying the status quo on the economy needed to be shaken up as excessive cash transaction in the past led to massive tax evasion.

Jaitley said this while addressing a press conference on the eve of one-year of demonetisation. He also supported the move in his blog post written earlier in the day.

Former prime minister Manmohan Singh, however, called it a "fundamentally flawed idea".

"Demonetisation was not a case of good idea, bad execution. It was a fundamentally flawed idea," Singh said in Ahemdabad. He said the twin (demonetisation & GST) blow was a complete disaster for India's economy that had broken the back of small businesses.

Jaitley, however, retorted saying organised loot was not in demonetisation but it was in 2G, Coalgate and Commonwealth games scams.

He said demonetisation had "ethical and moral" rationale behind it and therefore it was also "politically correct".

The finance minister said that the NDA as a party and government supported the move and its implementation which was rather smooth considering the mammoth exercise of banning 86% of a country's high denomination currency.

"The pace at which remonetisation was done in the weeks and months proceeding demonetisation is an example in itself that the world's largest currency replacement was done so smoothly," he said.

Earlier addressing the India Today Conclave, Jaitley sought to puncture claims that demonetisation had adversely impacted the small and medium businesses, a bulk of which were in the unorganised sector.

"If the impact of demonetisation was that huge on informal sector, there would have been social unrest," Jaitley said, adding any adverse impact of the two back-to-back reforms “ GST and demonetisation“ were "almost behind us".

He said even if the economy slowed for a quarter or two, the steps were worth taking as they brought about a major change in India's spending behaviour and made it a less cash economy.