Finance Minister Arun Jaitley on Saturday said that Prime Minister Narendra Modi’s historic decision to demonetise high-value currency notes is altering the nation’s conduct and will infuse more formal savings into the financial markets instead of dead assets in a possible reference to Indians’ preference for gold.

Mr. Jaitley also exuded confidence that the only difficult issue pending before the Goods and Services Tax council will be resolved soon as he expects states to rise to the occasion in view of the time constraints posed by the deadline for implementing the new indirect tax regime. Though he didn’t explicitly mention the single ‘difficult issue’, it is likely the ongoing tussle between the states and the Centre on the dual administrative control structure over GST payers.

Recounting the reforms undertaken by the Centre in 2016, such as the formation of a Monetary Policy Committee, the passage of the Insolvency and Bankruptcy Code as well as the Aadhaar laws, the FM said, “Of course, the year ended with the Prime Minister’s historic decision with regard to the replacement of the high-value denomination currency, which actually is now tending to alter the manner in which we conduct ourselves.”

“This one decision that has ensured that a lot of money has come into the banking system, a lot of informal savings have become formal now, and therefore, the tendency to invest these more formal savings in instruments that you keep an eye on is also increasing,” he said, urging stock market watchdog Sebi to prepare for a higher role in the months to come as he expects the size of India’s capital market to expand.

“As the economy develops, the best of the Indian markets is yet to come. We have seen in recent times that our confidence itself in managing the Indian economy has been increasing,” said Mr. Jaitley, speaking at a function to inaugurate a new training institute set up by Sebi in Maharashtra’s Raigadh district.

The entire system has been trying to encourage “ordinary citizens to channelise their savings into the market which indirectly would then contribute to the process of national development rather than be blocked only in dead assets,” he stressed.

GST Hopes

The Finance Minister also termed “the whole process of deliberative democracy by which the states and the Centre have been negotiating for an early implementation of the Goods and Services Tax” as a significant reform.

“We have had a series of meetings, and with each meeting we have been able to clear up most of the issues. Only one difficult issue remains pending and I have no doubt in my mind that with the time constraints we are working now, everybody will rise to the occasion and a resolution of that problem also would not be very far off,” Mr Jaitley said, referring to the GST Council that is expected to meet on January 3and 4 to resolve the outstanding issues that hold up implementation of the GST regime.

The Centre has set a rollout date target of April 1, 2017 for GST, but the FM has earlier said that since it is a transaction tax, it can also be rolled out in the middle of the year. As per Constitutional amendments to enable GST, the existing indirect tax regime will cease to exist from September 16, 2017.