With the recent imposition of demonetization, one must be absolutely clear of the fact that it is going to have an effect on the economy but this effect will be a temporary one. Demonetization and its implementation gave rise to a course of events which one may expect to be clearly evident in this year’s Budget.
Eustan Ventures clustered some data that supports economy to grow at a rate of 6.75-7.50% in the fiscal year 2017-2018. Statistics department put down a rate of 7.1% growth of economy in the year 2016-2017 excluding the effect of demonetization. International Monetary Fund pared down a rate of 6.6% in year 2016-2017 and 7.2% in 2017-2018.
The adverse effects of demonetization must be considered as transient. The bigger picture is waiting. It was indeed a big step which caused a lot of loss in the short-run but the future seems bright enough if one peeps deeper into what awaits in the long-run. Once the cash supply gets replenished which will happen most probably by end of March this year, economy will recoil back to normal. Demonetization has short term costs but it provides with long term perks. Costs involve contraction of cash supply and slowing down of GDP albeit temporarily. The gravy definitely offers a much better view consisting of increased digitalization, tax compliance, tax revenue collection and GDP growth.
Universal Basic Income is going to be a fresh concept added this year. It will serve as an alternative to various other social upliftment schemes run by the Government at present. It involves transferring the money directly into the bank accounts of benefactors. It visibly seems an appealing and exciting idea but their are some hurdles in its way to actual implementation. Most important barrier is that it may become an additional scheme rather than a replacement to the existing programmes making it unaffordable ultimately.
Survey suggested the need to privatize aviation, banking and fertilizer sector. Also, it revealed the difficulties in privatizing public sector despite the constant and strong arguments by firms that believe they belong in private sector.
This survey hints a lot about what is to come next but at this stage we can only predict and bide one’s time hoping that the morrow has some really favourable news to offer.
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