Finance Minister Arun Jaitey has vehemently defended the centre's move to demonetise currency notes of Rs 500 and 1000 on November 8 last year, a day after the RBI revealed 99 per cent of banned notes were deposited.
However, he pointed out that all off the returned money may not necessarily be legitimate.
With over Rs 15 lakh crore of junked currency coming back into the banking system post demonetisation, the government had yesterday said a "significant portion" of it could be black money.
"A significant portion of SBNs (Specified Bank Notes) deposited could possibly be representing unexplained/black money," the finance ministry had said in a statement.
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On demonetisation's impact on the GDP, the Finance minister said it is temporary and that it will benefit in medium and long term even if it hits GDP in two or three quarters.
Yesterday, he had said the impact of demonetisation on GDP was only a "transient impact" and when more money comes into the system, it impacts the formal economy.
Jaitley said the fallout expected out of demonetisation was on 'predictable lines'.
He had earlier said the objective of demonetisation was to shift India from a predominantly high cash economy.
"We intended to give a blow to black money and... Expand the tax base of the country. It is obvious that post demonetisation, the direct tax base has already started expanding substantially," he said.
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The RBI in its Annual Report for 2016-17 said that 99 per cent of the junked 500 and 1,000 rupee notes has returned to the banking system. An estimated Rs 15.4 lakh crore worth old 500 and 1000 rupee notes were demonetised on November 8.
The minister said government has taken steps to squeeze out cash from the system and his next step would be stop use of black money in elections.
Demonetisation, he said, has left terrorists and separatists in Chhattisgarh and Jammu and Kashmir cash starved.
(With PTI inputs)
