After three years of demonetization of Rs. 1,000 and Rs. 500 currency notes, RBI Governor Shaktikanta Das has once again come out in support of the government and has defended the move by saying, “note ban actually did well to the economy”. On the other hand, Subramaniam Swamy slammed Goods and Services Tax (GST) as a hindrance towards becoming a superpower by 2030.
Crux of the Matter
Das Backs Demonitization RBI Governor Shaktikanta Das said, “I think demonetization has had a positive impact on the economy in terms of formalizing the economy, checking the so-called parallel economy/unaccounted money.” He also said that the Reserve Bank of India (RBI) hasn’t taken any stock of the impact of demonetization on sectors such as MSME.
Growth Focussed In January 2020, the retail inflation spiked to 7.59%, which is the highest in 68 months. The country witnessed a sharp increase in vegetable prices, to which the RBI Governor said, “With this temporary spike in inflation, we have not shifted our attention from growth. We are still focused on growth.”. Finance Minister Nirmala Sitharaman recently had said that except for some perishable commodities, prices of most of the products are within the acceptable limits. Speaking on the liquidity crisis in the country’s NBFC sector Shaktikanta Das said that the RBI wass closely and intensively monitoring the top 50 NBFCs which account for roughly 75% of the total NBFC portfolio. He added by saying, “We are very mindful of the aspect of financial stability in the case of banks too. RBI will always ensure that stability of the banking sector is maintained.”
Swamy Slams GST On the contrary, BJP MP Subramanian Swamy has described GST as ‘the biggest madness of the 21st-century’ and highlighted that the country needs a 10% growth per annum to become a superpower by 2030.
Calling GST a complicated regime he said India is facing a shortage of demand as people do not have money to spend which according to him is hindering the economic cycle. He also pointed out the need for new reforms and believes that India has not improved on the reforms that former Prime Minister Narasimha Rao had brought in.
Curiopedia
The GDP growth rate measures how fast the economy is growing by comparing one-quarter of the country’s GDP to the previous quarter. GDP measures the economic output of a nation. The GDP growth rate is driven by the four components which are personal consumption, business investment, Government spending and net trade. The OECD defines GDP as “an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production and services. The international standard for measuring GDP is contained in the book System of National Accounts (1993), which was prepared by representatives of the International Monetary Fund, European Union, Organisation for Economic Co-operation and Development, United Nations and World Bank provides a set of rules and procedures for the measurement of national accounts. More Info
Demonetisation – On 8 November 2016, the Government of India announced the demonetization of all ₹500 and ₹1,000 banknotes of the Mahatma Gandhi Series. It also announced the issuance of new ₹500 and ₹2,000 banknotes in exchange for the demonetised banknotes. The Prime minister of India Narendra Modi claimed that the action would curtail the shadow economy and reduce the use of illicit and counterfeit cash to fund illegal activity and terrorism. The announcement of demonetisation was followed by prolonged cash shortages in the weeks that followed, which created significant disruption throughout the economy. People seeking to exchange their banknotes had to stand in lengthy queues, and several deaths were linked to the rush to exchange cash.According to a 2018 report from the Reserve Bank of India, approximately 99.3% of the demonetised banknotes, or ₹15.30 lakh crore of the ₹15.41 lakh crore that had been demonetised, were deposited with the banking system. The banknotes that were not deposited were only worth ₹10,720 crore, leading analysts to state that the effort had failed to remove black money from the economy. More Info
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