Parliamentary Panel May Seek Study on Demonetisation & GST Impact

A parliamentary panel will study the impact of GST, demonetisation on GDP and industrial production.

A parliamentary panel will look to study the impact of GST, demonetisation on GDP and industrial production.

(Photo: The Quint /Shruti Mathur)

More than two years after the Centre’s demonetisation move in 2016, that saw invalidation of high-value currency notes as legal tender, and the 2017 introduction of GST, a parliamentary panel may now ask the Narendra Modi-led government to study the impact of the two key decisions.

The panel, Hindustan Times reported, will look to study the impact of the two decisions on the country’s GDP, investment and industrial production.

It may also flag “several inadequacies in the way GDP is calculated and insist that it take into account GST to ‘reflect reality’”, the report added.

A draft report submitted by the Estimates Committee of Parliament earlier, led by BJP’s Murali Manohar Joshi, had said that the impact of demonetisation and GST, in concrete terms, was yet to be worked out.

BJP MPs Had Blocked Earlier Report on GDP

The parliamentary panel headed by Joshi, in a draft report, had questioned the mechanism for calculating the country's GDP and asserted that the methodology needs review to reflect the ground reality, PTI had reported.

The report, which was tabled in the Estimates Committee meeting on 11 October 2018, had created a rift among the BJP parliamentarians of the panel, as Joshi was in favour of adopting the report, while other party members led by MP Nishikant Dubey strongly opposed it.

While Joshi was opposed by his own party MPs over the report, the Opposition parliamentarians came out in his support at the meeting, according to a source who was present there.

"Detailed examination reveals several inadequacies in the GDP measuring mechanism, most noticeable being depletion of natural resources not being taken into consideration," the report had stated.

It also said there is no mechanism to assess whether an increase in Gross Domestic Product (GDP) leads to happiness among the people.

In the report, the committee concluded that the mechanism developed for GDP estimation needs review.

It should reflect the ground reality, it further said.

Countering the claims in the report, Dubey said India has adopted and followed all globally accepted parameters for calculating the GDP, and in an era of globalisation, the country cannot isolate itself by developing an indigenous method to calculate the index.

He further said, if the country does so, it will severely impact flow of foreign investment and the country's ratings by international agencies.

(With inputs from PTI.)