1. Leaked Rs 2,000 notes seem to have forced PM Narendra Modi hand; GDP set to be hit, says Arvind Panagariya

Leaked Rs 2,000 notes seem to have forced PM Narendra Modi hand; GDP set to be hit, says Arvind Panagariya

Niti Aayog Vice-Chairman Arvind Panagariya on Thursday said Prime Minister Narendra Modi's much-debated demonetisation move might affect the growth of the country's economy.

By: | New Delhi | Published: December 1, 2016 6:55 PM
Niti Aayog Vice-Chairman Arvind Panagariya on Thursday said Prime Minister Narendra Modi's much-debated demonetisation move might affect the growth of the country's economy. (PTI) Niti Aayog Vice-Chairman Arvind Panagariya on Thursday said Prime Minister Narendra Modi’s much-debated demonetisation move might affect the growth of the country’s economy. (PTI)

Niti Aayog Vice-Chairman Arvind Panagariya on Thursday said Prime Minister Narendra Modi’s much-debated demonetisation move might affect the growth of the country’s economy. The eminent economist opined that GDP rates might decline in the third and fourth quarters of the current fiscal, a report said. Notably, according to the data released by the Central Statistics Office, the gross value added (GVA), which is estimated at the basic price, showed a growth of 7.1 per cent in the second quarter of 2016-17, as against 7.3 per cent a year ago. As Indian economy grew at 7.3 per cent in the September quarter, experts and India Inc said downside risks prevail on account of lower consumption due to demonetisation and global headwinds, predicting the countrys GDP growth to slow down in the near term. Panagariya, however, had earlier backed the move saying will leave a “very positive” impact on the economy in the long term as more people will move towards digital transactions.

“It is my belief that the Prime Minister had to announce the roll out of demonetisation sooner than earlier planned, because information about the new Rs 2000 notes starting leaking online. This seems to have forced the Prime Minister’s hand,” he told India Today. Echoing PM Narendra Modi’s statement that demonetisation is only the beginning, he said, “A reduction in customs duty on gold is being mulled since high customs duty on gold encourages smuggling. Hence, the government is looking at reducing customs duty so that there is no incentive for illegitimate transactions.”

He also lauded the government’s effort to flush out black money from the real estate sector. “One of the reasons why stamp duty is high in real estate is on account of black money in the system. With black money knocked out, there is a case for stamp duty to be brought down.” With the government scanning all benami transactions in real estate, he said that black money inflow will be checked.

Panagariya said possible simplification of tax laws will pivotal. “Current tax laws give a lot of discretionary powers to the tax man. The government is looking at reducing exemptions and simplifying tax laws so that there is no scope of discretionary powers being misused,” he said.

Earlier, on concerns being raised by economists and rating agencies on the economic growth front, Panagaria had said, “Everybody is expressing their views. It has to be seen what happens quantitatively. Mr (Aditya) Puri from HDFC Bank has said that it is an overstatement regarding this (impact of demonetisation on GDP growth).”

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    Ganapathy C
    Dec 2, 2016 at 4:45 am
    If stamp duty on real estate reduces, then I hope all state govts. will reduce the ready reckoner rates, which also contrbues to high stamp duty snd high prices of property.
    Reply
    1. S
      smn
      Dec 1, 2016 at 6:52 pm
      one suggestion for immediate cash crunch can be to print more and more notes of Rs.10/- and Rs.50/- which will reduce ding of cash because all banks are giving Rs.2000/- . How can we buy vegetables from roadside vendor by giving him 2000 or how to travel from Bandra to Borivali where rickshaw charges are max 600-700. no rickshaw fellow gives you a change of Rs.1300/-. One more point though there is internet banking and such other facilities in our country but still we should not forget there are villages where there is no electricity, no banks, till date. How would such people manage their daily needs ? Demonitization is the best and long awaited step taken in manner required. Deployment of ngos at such places for full filling daily needs of such people should be on top priority to get best results from demonetisation.
      Reply
      1. A
        Abcd
        Dec 1, 2016 at 6:06 pm
        This moron does not know what he is talking. Demonitization does not affect demand. It merely changes the mode of transaction. So, the economy will actually grow faster because of ease and better liquidity as digital transactions take much less time than cash....
        Reply

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