Manmohan takes potshots at note ban, 'hasty' rollout of GST
New Delhi: Former prime minister Manmohan Singh today again warned of demonetisation and "hasty" implementation of GST adversely impacting GDP growth.
Singh, who had previously cautioned against note ban shaving off 2 per cent of GDP, said demonetisation of 86 per cent of the currency in circulation and the hasty implementation of the Goods and Services Tax (GST) have impacted informal and small scale sectors, which account of about 40 per cent of the USD 2.5-trillion economy.
"Both demonetisation and the GST have had some impact (on GDP growth)," he said. "Both would affect the informal sector, the small scale sector... the sectors today are responsible for 40 per cent of GDP."
Ninety per cent of India's employment is in the informal sector, he told CNBC-TV 18.
"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. These are bound to affect the GDP growth adversely," he remarked.
On November 25 last year, some two weeks after old 500 and 1,000 rupee notes were junked, Singh had in his Parliament speech termed demonetisation a "monumental mismanagement", "organised loot" and "legalised plunder" which would cause GDP growth to fall by 2 per cent.
GDP growth in the first quarter of current fiscal slumped to a three-year low of 5.7 per cent, down from 7.9 per cent in April-June quarter of 2016. In January-March quarter, the growth declined to 6.1 per cent from 8 per cent in the year- ago quarter.
The government had blamed de-stocking ahead of the rollout of the Goods and Services Tax (GST) from July 1 as the primary reason for the fall in the GDP growth rate.
GST unified more than a dozen central and state levies like excise duty, service tax and VAT, but its implementation has seen technical glitches with the registration and tax filing portal, forcing the government to postpone return deadlines.
In April, when the supporting GST bill was passed in Parliament, the former prime minister had hailed it as a "game-changer" while cautioning against the difficulties in its implementation.
On August 30, the Reserve Bank of India said nearly 99 per cent of the Rs 15.44 lakh crore junked currency had returned to the banking system, raising questions on the efficacy of the government's note ban decision that was aimed at curbing corruption and black money.
GST on petrol, diesel needs wider discussion: Nitish
Patna: Bihar Chief Minister Nitish Kumar today said the issue of implementing the Goods and Services Tax (GST) on petrol and diesel requires a wider discussion in the GST Council.
"Prices of petrol and diesel would continue to go up and down and their rate varies every day," Kumar told reporters on the sidelines of the weekly 'Lok Samvad' (interaction with the public) programme. Kumar, however, said taxes on petrol and diesel are a major source of development programmes everywhere in the country.
"The issue of implementing the GST on petrol and diesel requires a wider discussion in the GST Council," he said.
Talking to reporters separately, Deputy Chief Minister Sushil Kumar Modi, who held the first meeting of the Group of Ministers (GoM) on the GST at Bengaluru last week, said petrol and diesel have already been in principle a part of the GST. "Petrol and diesel are already part of the GST regime in principle and hence, there is no need to carry any amendment in the GST legislation. The issue is when to start the implementation of the GST on petrol or diesel, which needs a wider discussion in the GST Council," he said.
Sushil Modi heads a five-member GoM committee constituted by the Centre recently to look into technical challenges being faced by the GST registration and tax filing portal. Asked if the inclusion of petrol and diesel in the GST would lead to lowering of their prices, Sushil Modi said he cannot make a categorical comment on the issue.
He said registration of house and other properties is also a part of the GST, though it has not been implemented so far.