Finance Minister Arun Jaitley on Monday said the fallout from demonetisation was to be expected but it will benefit the country in medium and long term.
Jaitley said the fact that money got deposited in banks does not mean that all of it is legitimate money. "It's nobody's case that black money has been completely eliminated after demonetisation," he stated. His remarks came just a day after the Reserve Bank said that almost all of the demonetised currency came back into the system.
Coupled with GST, demonetisation will give a "significant boost" to direct tax revenues as many people have come under the tax net. He added the country was ready for demonetisation even if there was political resistance.
The minister also said that consolidation of PSU banks is on cards as the country needs "fewer but stronger banks".
Addressing the problem of bad loans, Jaitley said that a resolution will take time. "You can't have a surgical solution to it", he said. If private sector cannot pay back its loans someone else should be allowed to take over,
Recently, the RBI asked banks to start insolvency proceedings against its 12 biggest defaulters.
(With inputs from PTI)