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LATEST NEWS UPDATES | Economy yet to recover from the body blow of demonetisation, admits Economic Survey -Mayank Jain

Economy yet to recover from the body blow of demonetisation, admits Economic Survey -Mayank Jain

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published Published on Aug 15, 2017   modified Modified on Aug 15, 2017
-Scroll.in

The Economic Survey stated that long term benefits of the exercise are yet to materialise.

It is now over nine months since the government suddenly withdraw 86% of India’s currency in November but India’s Chief Economic Advisor Arvind Subramanian remains unsure if this note ban or demonetisation actually helped any sector of the Indian economy, the latest volume of Economic Survey tabled in Parliament on Friday suggests.

The Chief Economic Advisor is always the leading author of the Economic Survey but it is a joint effort of the government led by key writers in the finance ministry. It often goes through reviews of select parts because it is meant to provide a critical view of the past as well as project the economic and development direction for government to follow in near and long-term future. This iteration of the report was keenly awaited as it provided the first chance for Arvind Subramanian to take stock after a series of data on the impact of demonetisation has already been revealed.

While this latest edition of the Economic Survey was supposed to come with more macro-level data and evidence to make conclusions about the efficacy of the move, the only conclusion Subramanian seems to have drawn is a confirmation of economists’ worst fears that demonetisation jeopardised both the formal and informal economy and even after nine months, recovery is not yet complete.

In the mid-term Survey, Subramanian stated that demonetisation hit the informal sector hard even as there is a lack of data to quantify the amount of stress those in the informal economy had to bear because of the move.

Informal sector hit

Maintaining that the demonetisation exercise will result in short-term costs, the Economic Survey stated that most sources of data capture the formal sector, which was largely insulated from the demonetisation shock. The Survey looked at two-wheeler sales as a proxy for the health of the informal sector.

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Scroll.in, 12 August, 2017, https://scroll.in/article/847014/economy-yet-to-recover-from-the-body-blow-of-demonetisation-admits-economic-survey


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