With reference to “Demonetisation: Evaluating the critics” (November 13), Arvind Panagariya has beautifully dissected the claims and counterclaims of the effects of demonetisation
on the economy. In fact a few of the claims are a misnomer created by groups with vested interests. One such misnomer was that since most of the cash has been deposited in the banks, there was no black money left. Panagariya has very lucidly explained the process, the true after-effects of which may take a couple of years to reveal, and the remedial action by the then government. By de-registering 224,000 companies and disqualifying 309,000 directors the government has simultaneously cleansed the offices of the Registrar of Companies. This will, in the long run, increase the efficiency in the offices of the ministry of corporate affairs and stop the practice of fictitious transactions that are resulting in thousands of shell companies.
As regards the loss of two per cent of the gross domestic product (GDP), Panagariya has rightly explained that the real benefit of sustained low prices of crude, and consequently low value addition in petro-products and exports thereof was felt in 2016-17 on the full year basis. So much noise was made of 5.8 per cent growth in GDP for the April-June quarter, a slight decrease as compared to the trailing quarter. It should be seen as the activity for only two-and-a-half months as manufacturing activity took a back seat in view of the de-stocking before the implementation of the goods and services tax from July 2017.
As regards the loss of 1.5 million jobs, the less said the better. There is neither reliable data nor the right definition for the various types of job, the statistics for which are available with the Indian Statistical Organisation.
The present government would do well to organise/restructure CMIE, ISO
and also synchronise them with the National Population Survey, the figures from which are available as of 2011 only. A reliable data on jobs and employment is the need of the hour as an indicator for any economy.
Naresh Saxena, New Delhi
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