Jose K Joseph
Bhubaneswar: Slow economic recovery in the wake of demonetisation and the lack of clarity regarding the implementation of Goods and Services Tax (GST) has left businesses in the city in a limbo. Economists believe that if the current situation continues, the `50,000 crore annual compensation for losses due to GST implementation that the central government has promised, will be inadequate.
“GST will benefit state such as Maharashtra, Andhra Pradesh and Tamil Nadu. But, demonetisation has affected most states and they will need a higher quantum of compensation,” SN Misra, economist and, Dean, KSOM, said.
While accepting statements of central ministers such as Arjun Ram Meghwal and Piyush Goyal that demonetisation will boost the country’s GDP, Misra believes the benefits will be minimal.
“It is true that demonetisation has brought a portion a black economy under the taxman’s scanner. It will provide a boost to GDP. But systems of generation of black money are untouched and therefore this GDP boost will be minuscule. For instance, the hunt for black money has not touched sectors such as real estate and gold, and only 10 per cent of black money is cash,” Misra said.
There is opinion among experts that demonetisation is indeed akin to forced-sterilisation drive undertaken by the Indira Gandhi government during the Emergency (1975-1977) as Steve Forbes, the editor-in-chief of Forbes magazine had stated in a recent article. Forbes also described demonetisation as “theft of people’s property” and “immoral”.
They also feel it is too late now to reverse demonetisation as it will create issues. “Such a decision would create more lack of trust. The government has to focus on creating awareness about backup systems in rural areas,” Amarendra Das, an economics professor with National Institute of Science Education and Research, said.
With 600 million people still excluded from the banking system, the immediate jump to cashless economy is impractical, experts said.
Cooperative banks in the state were among the grass-roots banks that were gravely affected by demonetisation as farmers are dependent heavily on cash for their transactions. “The immediate decision taken by the Chief Minister to hold a consultation with the Prime Minister regarding cash crunch has saved the cooperative banking sector. Now we have adequate cash to help farmers,” president of All Orissa Cooperative Banks Association, AK Mohanty, said. PNN
