Congress leader P Chidambaram hit back at the Modi government’s demonetisation move on Thursday, as India’s economic growth slowed to its lowest in over two years. Chidambaram said that he was right in predicting the slow growth of the economy and that demonetisation had made it worse. Chidambaram on his official Twitter account, wrote: “I had said demonetisation will affect growth by 1-1.5 per cent. Spot on. GVA down by 1.3 per cent.” In another tweet, he added, “Economy began slowing down in July 2016. Demonetisation made it worse.
Data released by the government on Wednesday showed that India’s GDP during the past fiscal grew at 6.1 percent, compared with a provisional 7.1 percent in the previous quarter. The GDP growth was also lower than China’s growth of 6.9 percent for the first three months of 2017. For the 2016/17 fiscal year ending in March, the government had reported the GDP growth of 7.1 percent.
Following the November’s demonetisation drive, the government has come under criticism from opposition political parties and economists, that it has slowed down India’s growth story and triggered job cuts. The impact could be seen on the GVA in the third as well as the fourth quarter of 2016-17, as it has slipped to 6.7 percent and 5.6 percent respectively, from 7.3 percent and 8.7 percent in the previous year.
Meanwhile, almost every sector, other than agriculture, showed a deceleration in the aftermath of demonetisation. Construction activity contracted 3.7 percent year-on-year in the March quarter compared with a 3.4 percent growth in the prior quarter. Manufacturing grew 5.3 percent in the last quarter from a year ago, slower than an annual rise of 8.2 percent in the December quarter, and 12.7 percent last year.
Recently, Chidambaram while speaking at an ABP News’ event ‘Shikhar Sammelan’, had said that demonetisation was a wrong move by the current government. He added that it is not right to decide the result of elections based on one issue as BJP won in Uttar Pradesh but lost in Punjab and Congress finished as single largest party in Goa as well. He added that even though this isn’t a crisis situation, it is a fact that the economy remains stagnant. However, he had praised the GST bill saying that it is a good move for the Indian economy and was passed after discussion with the Opposition.