Finance Minister Arun Jaitley on Thursday sought to discount the impact of demonetisation on the Indian economy in the wake of the latest GDP figures and dismissed criticism of the government that it has only promoted jobless growth in the past three years.
At a media conference here on the completion of the NDA’s three years in office, Jaitley asserted that there were several factors even before demonetisation like global slowdown which cumulatively impacted the economy.
Jaitley said the criticism of jobless growth was a propaganda by opponents who had nothing substantial to comment on the government’s performance.
The Finance Minister said the government had, in the past three years, left an impact in three areas — capacity to take decisions, even tough ones, clear direction in decision making, and allowing market mechanism to ensure transparency and maximum revenue in allocation of public resources.
“What you think is very clear, is not clear. Let us not be guided by erroneous premises. There are several factors which can contribute to GDP. There was some slowdown visible even before demonetisation in the last year. There was impact of global factors,” he said in reply to a question whether demonetisation had an effect “which was very clear” from the GDP numbers released on Wednesday.
“There could be some impact on two quarters (due to) the issue which you mentioned,” he told the questioner.
The latest figures released by the official statistician on Wednesday showed the country’s GDP growth during the last quarter fell sharply to 6.1 per cent, while it grew at a lower 7.1 per cent in the full fiscal 2016-17, from 8 per cent in the previous year.
Buttressing his point, Jaitley said that the services and financial sectors, which normally grow at around 9-10 per cent, had a fall in growth even before demonetisation was announced.
“These are cumulative factors that too play a role. A 7-8 per cent growth of the economy has become the Indian normal, which is very reasonable by global standards and reasonable by Indian standards,” he said.
He also dismissed a reporter’s view that the Goods and Services Tax (GST), proposed to be rolled out from July 1, could also slow down the economy.
Chief Economic Advisor (CEA) Arvind Subramanian intervened here to say that the GST could actually result in decreasing price inflation and increase spending.
On the opposition criticism of jobless growth, Jaitley said that “for some it is propaganda material.”
“In the beginning, they said it is incremental reforms and not big reforms. After GST, now they say it jobless growth. Jobs are created when the economy grows…jobs are created in the formal and informal sectors. In the informal sector, there is no survey (of jobs created).”
Giving an overview of three years, Jaitley said the NDA came to power against the backdrop of global slowdown and shrinking economy when the country had gone off the global radar, besides three years of poor rainfall.
“What we inherited was that there was lack of credibility of the government because of corruption and indecisiveness.”
In this context, Jaitley said demonetisation has created a new normal replacing the old order of cash and parallel economy, which has been eliminated.
The three distinct advantages of demonetisation, according to Jaitley, were greater movement towards digitisation, widening of the tax base resulting in 18 per cent increase in revenue in 2016-17, and Operation Clean Money under which it is no longer safe to deal in cash. All these helped to esblish a new normal in India.