“What do you think is clear is not very clear,” said Union Finance Minister Arun Jaitley, a reporter for a journalist in Delhi, asked Thursday to take stock of the performance of the three-year government modi. The reporter asked about the impact of the demonetization of GDP, citing the sharp drop (6.1 percent) in the January-March quarter. Jaitley played down the impact of demonetization by saying that it was not the main reason for the economic slowdown.
“There are several factors that contribute to GDP.There has been an impact on growth due to other factors, even before demonetization.” A particular factor that you mention (sic), “said Jaitley Government disturbing movement defence announced on November 8. Although Jaitley is already only a part of his argument is weak due to figures January-March quarter, it is clear that demonetization left much damage to the economy. A slowdown in areas dependent on money, such as construction, commerce, hotels, financial services and real estate, shows.
With the exception of public spending and agricultural growth, all other key components of GDP were reduced. Therefore, Jaitley, at best, skillfully sidestepped the question about the impact of banning growth notes rather than responding to the facts.
But what is more interesting part of Jaitley’s statement that there was a decline in the economy before the demonetization due to several factors? This directly contradicts the purpose of Prime Minister Narendra Modi when he told Parliament in February of this year that demonetization had been made since the economy was strong at the time. Modi uses the analogy that an operation can be performed only on a healthy body.
“Given that the economy was in good condition, the demonetization time was the best,” Modi said at Lok Sabha during his response to the Thanksgiving motion under President Pranab Mukherjee (see report here). “When you can undergo an operation? When the body is healthy.” The economy has it right and so our decision was made at the right time, “said Mr Modi. Now Jaitley admitted that the economy is already facing a slowdown due to multiple factors, even before the demonetization clash contradicts Modi’s logic.
But Jaitley is right to say that 7-8 percent growth is quite good for India in an environment where the world is facing an economic downturn. “I think in the current situation of the world, the growth of 7-8 percent is quite reasonable,” the FM said. In addition, when the impact of all pro-growth reform policies takes place, there will undoubtedly be beneficial results in the economy, Jaitley said.
Certainly, the three years of the Modi government’s mandate clearly succeeded in pushing for reform with the launch of the reform process regarding the tax on goods and services (GST), bankruptcy code, failed commercial loans and Most will rationalise subsidies. Clearly, this government has improved the UPA regime in terms of proactive reforms and changes in the role of government offices. In addition, within three years of Modi’s rule of governance, he created a good image without major corruption cases involving central ministers and the government has largely kept its promises to comply with the reform process.