New Delhi: As many economic experts ring the alarm bell on the economy, former Prime Minister Manmohan Singh has a look on his face that says, “I told you so.” Singh, himself a renowned economist, had previously cautioned against the note ban and said it would shave off 2 per cent of the GDP.
On Monday, while speaking exclusively to Network 18, he once again warned of demonetisation and "hasty" implementation of GST adversely impacting GDP growth.
“Both demonetisation and the GST have had some impact (on GDP growth)," he said. "Both would affect the informal sector, the small scale sector... the sectors today are responsible for 40 percent of GDP,” he added.
Ninety percent of India's employment is in the informal sector, he said. “The withdrawal of 86 per cent of currency plus also GST, because it has been put on practice in haste, there are lots of glitches which are now coming out. These are bound to affect the GDP growth adversely,” he remarked.
This is not the first time Singh has spoken against demonetization. He had broken his rare reticence and had spoken out aggressively and even harshly in Parliament in November, two weeks after old 500 and 1,000 rupee notes were junked.
He had called the entire exercise a “monumental mismanagement”, an “organised loot” and “legalised plunder” of the common people. He had warned of a drop in national income “by about 2 percentage points… an underestimate”.
GDP growth in the first quarter of current fiscal has slumped to a three-year low of 5.7 percent, down from 7.9 percent in April-June quarter of 2016. In January-March quarter, the growth declined to 6.1 percent from 8 percent in the year-ago quarter.
The government had blamed de-stocking ahead of the rollout of the Goods and Services Tax (GST) from July 1 as the primary reason for the fall in the GDP growth rate.
GST unified more than a dozen central and state levies like excise duty, service tax and VAT, but its implementation has seen technical glitches with the registration and tax filing portal, forcing the government to postpone return deadlines.
In April, when the supporting GST bill was passed in Parliament, the former prime minister had hailed it as a "game-changer" while cautioning against the difficulties in its implementation.
On August 30, the Reserve Bank of India said nearly 99 percent of the Rs 15.44 lakh crore junked currency had returned to the banking system, raising questions on the efficacy of the government's note ban decision that was aimed at curbing corruption and black money.
Comments
0 comment