International Finance

‘Demonetisation has not hurt Indian economy’

According to the Finance Minister, the country’s tax figures show little disruption due to the cash crackdown

January 11, 2017: Finance Minister Arun Jaitley on January 9 dismissed concerns of an economic slowdown in India as a result of the recent demonetisation.

In the first three quarters of the fiscal year that ends in March, overall indirect tax collections were up 25 percent from a year earlier.  Tax collection was up 12.01 percent in April-December 2016, compared to revenue in the year-ago period.

On November 8, Prime Minister Narendra Modi announced a ban on all 500 and 1,000 rupee notes aimed at counterfeiters and hoarders of black money. Demonetisation affected the nation as a whole causing a major liquidity crisis.

The shock decision prompted most private economists to slash growth forecasts for Asia’s third largest economy to 6.3-6.4 percent for the fiscal year 2016/17 from over 7.5 percent, citing the impact of demonetisation, which they said would linger for one more year.

Jaitley called those concerns unfounded. “All the stories about job losses or businesses suffering losses are anecdotal,” he told reporters.

“Tax collection data is real and not an estimation,” Mr. Jaitley explained, while dismissing fears of a slowdown following the currency crackdown.

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