Note ban -GST impacting GDP

Former prime minister Manmohan Singh today again warned of demonetisation and “hasty” implementation of GST adversely impacting GDP growth.

Singh, who had previously cautioned against note ban shaving off 2 percent of GDP, said demonetisation of 86 percent of the currency in circulation and the hasty implementation of the Goods and Services Tax (GST) have impacted informal and small-scale sectors, which account for about 40 percent of the USD 2.5-trillion economy.

“Both demonetisation and the GST have had some impact (on GDP growth),” he said. “Both would affect the informal sector, the small-scale sector… the sectors today are responsible for 40 percent of GDP.”

Ninety percent of India’s employment is in the informal sector, he told.
“And the withdrawal of 86 percent of currency plus also GST, because it has been put on practice in haste, there are lots of glitches which are now coming out. These are bound to affect the GDP growth adversely,” he remarked.