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Prime Minister Narendra Modi scrapped 500-rupee and 1,000-rupee
banknotes on Nov. 8 in a bid to flush out cash earned through
illegal activities, or earned legally but never disclosed.
Citizens could redeem their money only by depositing it with
banks, to be paid out over a period of time.
Since coming to power in 2014, Modi has pledged to crack down on
so-called black money with new measures including 10-year jail
terms for evaders.
"The incentive scheme has the potential of shifting at least 30
percent more customers to digital means which will further
reduce the cash requirement of nearly 2 trillion rupees ($29.69
billion) a year at the petrol pumps," Jaitley told reporters.
He said state-run insurance companies would offer discount of up
to 10 percent on payment of insurance premium through digital
means.
Government officials are worried 90 percent of the discontinued
notes could yet come back into the financial system, deposited
in banks to be converted into valid lower or new
higher-denomination notes. This would put a question mark on
meeting Modi's aim of flushing out untaxed money.
Indian banks have so far received nearly 12 trillion rupees in
discounted currency since the government decided to abolish high
value bank notes.
Opposition parties stalled the parliament for the 14th day on
Thursday seeking a probe into the mismanagement of supply of new
currency to the public.
Modi has called for patience until Dec.30 by when he has
promised the cash situation would stabilize, and urged the
people to shift to electronic transactions.
(Reporting by Manoj Kumar; Editing by Malini Menon and Ralph
Boulton)
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