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Members of Committee unconvinced with Patel

Members of Committee unconvinced with Patel

Members of Committee unconvinced with Patel
December 03
10:42 2017

Due to the cash crunch, the entire economy has been made to come to a standstill and many poor daily wage workers are left with no jobs and their daily income has stopped because employers are unable to pay their daily wage.

Urjit Patel is mum on the majority of the questions raised by the Members of the Parliamentary Standing Committee on Finance headed by Dr. M. Veerappa Moily.   He is failed to answer many of the questions raised by the Members of Parliament during the meeting.  One of the member criticized that the RBI Governor was unable to tell us how much money has come back to the banks… Nor was he able to tell us when the system will be normal.

Briefing the Panel Members over the issue of demonetization Mr. Patel said that Rs 9.2 lakh crore in new currency has been introduced in the economy since the note ban came into effect on 9 November 2016.

The Opposition has slammed the RBI chief’s move to evade questions over how much of the demonetized currency made its way back to the banking system. Opposition leaders have also demanded Patel’s resignation.

Even though Patel found support from unexpected quarters after former Prime Minister, former RBI Governor and senior Congress leader, Manmohan Singh asked him to not answer questions that may cause problems, Dr Singh said that hasty implementation of GST and demonetization had adversely impacted GDP growth.  He further added that it was too early to conclude that the economic slowdown has reversed as the 6.3 per cent growth rate in the July-September quarter, the GDP growth dropped to 5.7 per cent in the first quarter of 2017-18. Farm sector growth fell to 1.7 per cent from 2.3 per cent in the previous quarter and 4.1 per cent in the same quarter last year,” Manmohan Singh said.

If, I go into the depth of Demonetization – it prohibited the holding, transferring or receiving of scrapped old Rs.500 and Rs. 1000 currency notes from November, 2016, and also with a lot more prohibitions. Later the government assured in the Supreme Court that it will not take any criminal action for possessing demonetized notes beyond December 31, 2016. The law aims to eliminating the possibility of running a parallel economy using demonetized currency notes.

The Government expected that the demonetization policy will help India to become corruption-free,

2) help the government to track the black money,

3) Stop funding to the unlawful activities and unaccounted cash flow.

4) curb the menace of money laundering,

5)  stop the circulation of fake currency,

The results are: 1)Due to the cash crunch, the entire economy has been made to come to a standstill and many poor daily wage workers are left with no jobs and their daily income has stopped because employers are unable to pay their daily wage.

2)        The announcement of the demonization of the currency has caused huge inconvenience to the people and the sudden announcement has made the situation become frenzied.

3)        Tempers ran high among the masses as there was delay in the circulation of new currency. It has to bear the huge cost of printing of the new currency notes. It took a long time to put new currency into circulation.

4)        The 2000 rupees note is a burden on the people as no one likes to do transaction with such high value currency. Some critics think it will only help people to use black money more easily in future.

5)        People have clandestinely discarded the demonetized currency notes and this is a loss to the country’s economy.

6)        Last but not least the small vendors have slept days together without any food as there is no one to buy their products as most of the people swiped their debit / credit cards to fill the pockets of rich businessmen.

7)        Wherever the work involved with daily wage labourers ie., real estate, construction works, public works of road laying etc., worst part laid down with daily wage bread winners have not seen cash for days together.

Simple to say, that the National Highways Authority of India (NHAI) was to shell out Rs 922 crore to private highway operators for the toll revenue loss.

Goods and Services Tax (GST) which came to effect from 1st July, 2017 with a principle of One Nation One Market and One Tax.

The Government expected that with a biggest Trade market that India has there are lots of merits and demerits to the newly introduced GST. With an extremely complex taxation system, it would sometimes make more sense for companies to import the products even though they could have been sourced indigenously.  If this one tax system is implemented without any hassles, the Indian government will significantly reduce corruption which is prevailing in the economy.  The consumers will no longer subject to dual taxation. With the decline in corruption and compliance costs, businesses are finding it much easier to operate in the country.

The results are: Since this law was implemented with a hurry and with a very short duration, neither the traders nor the general public could understand the proper meaning of it. The money from public market has shifted to government coffers.  After four months struggle and continuous meetings the government till now could not clear how much percentage of tax to be levied on a particular item. By the time it will adjust and the people understand and acquaint the tax system middlemen are minting money and filling their pockets.

Mr. Singh on this context during his speech to Parliament described demonetization of Rs 500 and Rs 1000 notes as a “monumental mismanagement”, “organised loot” and “legalised plunder” which would eventually shave off 2 per cent of the country’s GDP. As well said by the former Prime Minster the people in general and the informal sector in particular are one of the worst sufferers of notes ban and GST.

by Melissa

3.12.2017

 

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