Context
The Economic Survey presented on the eve of the Union Budget has been dominated by a singular action of the government
Economic survey’s view on Demonetization and its impact
- Difficult to predict: Economic survey acknowledges the complexities in assessing its potential impact as well as the lack of historical precedent to make reliable predictions
- Short-term costs and long-term benefits: Survey asserts that although there have been short term costs to economy, there will be long term benefits
- Reduction in GDP: Real GDP growth in the current fiscal, the Survey projects, will see a likely reduction by one quarter to half a percentage point relative to the baseline of about 7% as a result of the demand shock (a sudden event that increases or decreasesdemandfor goods or services temporarily) triggered by demonetisation
Recommendations of the survey
Devoting a whole chapter to demonetisation, the Survey recommends
- Fast, demand-driven remonetisation
- Further tax reforms, including bringing land and real estate under the ambit of the Goods and Services Tax
- Reducing tax rates and stamp duties
