India is witnessing a sharp decline in economic growth (“GDP growth boards slow train at 5.7%”, Sept. 1). It is clear that demonetisation has damaged the growth trajectory by pulling down the growth rate. Its impact will play out negatively at least for the next two quarters. With smaller businesses still grappling with the GST framework, there are concerns over what the expected revenue will be from the new indirect taxation policy. Although the government claims that there will be windfall gains from demonetisation and GST in the long run, the immediate need is to grease the wheels of growth. But there seem to be few instruments available before the government to do this. The monetary policy will be the most effective one. It remains to be seen how the government will persuade the RBI to give up its conservative nature regarding interest rate cuts.
Bibhuti Das,
New Delhi
ADVERTISEMENT