Following the opposition's criticism based on an RBI report which stated 99 per cent of demonetised currency had found its way back into the banking system, Jaitley said on a blog post that confiscation of currency was never the objective of demonetisation.
"An ill-informed criticism of the Demonetisation is that almost the entire cash money got deposited in the banks. Confiscation of currency was not an objective of Demonetisation," he said.
"Demonetisation is a key step in a chain of important decisions taken by the Government to formalise the economy," he wrote.
"Getting it into the formal economy and making the holders pay tax was the broader objective. The system required to be shaken in order to make India move from cash to digital transactions. This would obviously have an impact on higher tax revenue and a higher tax base," he added.
Jaitley further defended the move by saying it has resulted in higher collections as the number of tax filers had almost doubled.
"The impact of Demonetisation has been felt on collection of personal income tax. Its collections were higher in Financial Year 2018-19 (till 31-10-2018) compared to the previous year by 20.2%," he stated.
The demonetisation of Rs 500 and Rs 1,000 currency notes in November 2016, the minister said, had resulted in more formalisation (of economy), more revenue, more resources for the poor, better infrastructure, and a better quality of life for our citizens.
He further said with the implementation of the goods and services tax (GST), it is now becoming increasingly difficult to evade the tax system and the indirect tax to gross domestic product (GDP) ratio has gone up to 5.4 per cent post GST, from 4.4 per cent in 2014-15.
Another positive aftermath of demonetisation was the increase in digital transactions, Jaitley explained.
He said the share of indigenously developed payment system of unified payments interface (UPI) and RuPay card have reached 65 per cent of the payments done through debit and credit cards.
"UPI transactions have grown from Rs. 0.5 billion in October, 2016 to Rs. 598 billion in September, 2018. The value of BHIM transactions has gone up from Rs. 0.02 billion in September, 2016 to Rs. 70.6 billion in September, 2018," he said.
Read: 2 years of Demonetisation: Yay or nay