Panel may seek study on impact of demonetisation

PANEL MAY ALSO FLAG ‘INADEQUACIES’ IN THE WAY GDP IS CALCULATED AND INSIST THAT IT TAKE INTO ACCOUNT GST TO ‘REFLECT REALITY’

NEW DELHI: A parliamentary panel may ask the Narendra Modi government to study the impact of the 2016 invalidation of high-value banknotes and the 2017 introduction of the goods and services tax (GST) on key economic benchmarks such as gross domestic product (GDP), investment, and industrial production.

The panel may also flag “several inadequacies” in the way GDP — the value of goods and services produced in the economy — is calculated and insist that it take into account GST to “reflect reality”, HT has learnt.

The government justified the recall of old, high-value banknotes on grounds that it would help unearth black money and fake currency and curb terror financing. Later, it said the move would help shift India to a lesscash economy by promoting digital transactions. GST, which subsumed an array of local, state-level and central taxes, was billed as the biggest tax reform since Independence.

In a draft report, the Estimates Committee of Parliament, led by Bharatiya Janata Party (BJP) veteran Murali Manohar Joshi, acknowledged that the November 8, 2016 invalidation of ~500 and ~1,000 currency notes had led to an increase in digital transactions. GST kicked into force on July 1, 2017 .

HT has learnt that the draft report added: “The extent to which demonetisation and GST have affected the GDP, investment, industrial production, credit growth, capacity utilization etc, their impact in concrete terms is yet to be worked out.”