Demonetisation will have a positive impact on economic activities and growth in the next financial year, a top government official said today while dismissing fears of slowdown on account of note ban.
“The surveys on impact of demonetisation are all speculative. It (demonetisation) will have a small negative impact in the current quarter but we will have positive impact of demonetisation in the next financial year,” the official said.
The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) an indicator of manufacturing activity gives some information but they are not totally reliable.
India’s manufacturing sector contracted in December as new work orders and output took a knock for the first time in 2016, the PMI showed recently.
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The index came in below the crucial 50 threshold which separates contraction from expansion for the first time in 2016 in December.
The government, in a surprise move, demonetised Rs 500 and Rs 1,000 notes, which constituted 86 per cent of the currency, from midnight of November 8.
Talking about the 2017-18 budget, the official said that the focus of next year’s budget should be on job creation.
“We need to increase tax base. Very few people pay income tax in India. I am not in favour of increasing income tax slab,” the official said.