India should brace itself for slowdown for some time: Ex-CEA

Former chief economic adviser Arvind Subramanian on Sunday warned the Indian economy was in for a slowdown for some time as agriculture and financial system were under stress.

Speaking at the release of his book, Of Counsel: The Challenges of the Modi-Jaitley Economy, he said both demonetisation and implementation of GST have resulted in moderation of the economy and the budget estimate of revenue collection from the Goods and Services Tax (GST) seems to be unreasonable.

"To judge the GST by what the budget demands of the GST, is unreasonable. I will say it frankly, the budget has made unreasonable demands on GST. It has asked for 16-17 per cent (increase)," he said.

He also said that GST design could have been much better and there should not be more than three rates going forward.

The current rates are 28 per cent, 18 per cent, 12 per cent and 5 per cent.

With regard to the economy, he said, "we have to brace ourself for a slowdown for some time. I say that for a combination of reasons. First of all, the financial system is under stress, financial conditions are very tight. This is not conducive for rapid growth."
He, however, said, "If the Centre wants credit for this and it promises UBI on its own then fiscal space would be a serious issue."