Both demonetisation and GST have affected India’s gross domestic product (GDP) growth adversely, former Prime Minister Manmohan Singh said on Monday.
“Both demonetisation and GST have had some impact on GDP,” Manmohan Singh, who has earlier said the Indian economy has been running on only “one engine” of public spending, told media.
“Both would affect the informal sector, the small scale sector that are responsible for 40 per cent of of GDP… 90 per cent of employment is in the informal sector.
“So when 86 per cent of currency is withdrawn from circulation, plus GST, which was put in practice in haste.. lot of glitches are now coming up, it was bound to affect GDP growth adversely,” he said.
Former Reserve Bank of India Governor Raghuram Rajan estimated earlier this month that the country’s GDP had taken a hit of between 1 to 2 per cent due to demonetisation, which translated to a sum of around Rs 2 lakh crore.