"On November 8 last year, we introduced note ban and it had a major impact. Those who used to distribute money to stone pelters are not able to gather even 100 youth to pelt stones in the past eight to 10 months after demonetisation," Jaitely said.
He was speaking after listening to Prime Minister Narendra Modi's 'Mann Ki Baat' here with BJP workers.
The minister also said that "those who orchestrated" the 2008 Mumbai terror attacks stand isolated today.
"When they (Pakistan) released the person who did it (Hafiz Saeed) two days ago, the entire world said in one voice that the country is supporting terrorism and such a country shouldn't be a member of the world family," Jaitley said.
Speaking about the Centre, he said: "Now, you have a government which works towards increasing the country's power, credibility and tries to project our case to the world with strength."
The senior BJP leader claimed that for the first time the security forces have an upper hand in Kashmir valley.
"Our biggest problem is Kashmir. Narendrabhai government inherited a situation where there was a civil disobedience like situation three years ago. Thousands of stone pelters would gather to protest against stray incidents. Terrorists would mount attacks with impunity and Hurriyat leaders could close down the valley with one call.
"Today, the situation has changed. The person who becomes the commander of Lashkar (terrorist outfit LeT) knows he will be alive for two to three months. The intelligence network has been strengthened right down to the village level," he added.
"The Hurriyat leadership stands exposed today as it has been revealed from where they used to get money," he said, referring to money laundering cases filed against some of the Hurriyat leaders.