Demonetisation, hasty GST implementation adversely affected GDP: Manmohan Singh

PM Narendra Modi with Finance Minister Arun Jaitley

PM Narendra Modi with Finance Minister Arun Jaitley

Former prime minister Manmohan Singh today again warned of demonetisation and "hasty" implementation of GST adversely impacting GDP growth.

Speaking to CNBC TV18, on Monday, the former Prime Minister said: "Both demonetisation and the GST have had some impact (on the GDP growth)..."

Singh said 90% of India's employment is in the informal sector. Both will affect the informal sector and the small-scale sector. "And the withdrawal of 86 per cent of currency plus also GST, because it has been put on practice in haste, there are lots of glitches which are now coming out".

With informal and small-scale sectors accounting about 40 per cent of the United States dollars 2.5 trillion economy, Singh said that the decision of demonetisation, coupled with GST, had an adverse impact on the economy. "These are bound to affect the GDP growth adversely", he remarked. In January-March quarter, the growth declined to 6.1 per cent from 8 per cent in the year- ago quarter.

Jaitley had said that the fall in GDP growth was a "matter of concern", although he expressed hope that the economy will bounce back to a 7 per cent growth once effects of GST implementation on de-stocking ease in the current quarter.

Singh had countered the government's claim over the success of the demonetisation and GST. In the aftermath of the GST rollout too, Singh had told a meeting of the Congress Working Committee - the apex decision making body of the principal Opposition party that the economy was "running on just one engine of public spending".

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