Jaitley blogs: GDP had to grow post-demonetisation

TIL Desk/Business/New Delhi/ Praising the Interim Budget 2019-20 for being pro-poor and fiscally prudent, Union Minister Arun Jaitley on Friday said demonetisation had to increase the growth rate of the economy unlike what the critics thought.

“The former Prime Minister’s statement that it will lead to a 2 per cent drop in the GDP captured the imagination of the government’s critics. Neither the original data for 2016-17 and 2017-18 nor the first revision proved that,” he wrote in a blog.

On Thursday, the government revised the Gross Domestic Product (GDP) growth rates by 110 basis points from 7.1 per cent to 8.2 per cent for 2016-17 (the demonetisation year) and by 50 basis points from 6.7 per cent to 7.2 per cent for fiscal 2017-18 as part of second revision and first revision, respectively.

Jaitley said there are no established models on the impact of demonetization on GDP. Earlier, the figures did not correctly capture GDP growth as India had a large parallel economy with lot of activities taking place outside the formal economy, he said.