No study done on note-ban impact on economy, jobs: Govt

The Centre on Tuesday admitted it has not done any impact assessment of 2016 demonetisation on the economy or employment.

In the first ever official admission, Finance Minister Nirmala Sitharaman said that the Centre has not conducted any study of the impact of note ban on the small and medium businesses either.

“The Government has not undertaken any specific study to find out impact of demonetisation on Indian economy, particularly, MSME Industries and on the employment,” Sitharaman told the Rajya Sabha in reply to a written question.

The Reserve Bank of India has, however, suggested that demonetisation led to a fall in credit to small business and dented their exports.

An RBI study had raised a red flag on the adverse impact of demonetisation on MSMEs last year.

“The MSME sector has witnessed two major recent shocks, demonetisation and introduction of goods and services tax. For instance, contractual labour in both the wearing apparel and gems and jewellery sectors reportedly suffered as payments from employers became constrained after note ban. Similarly, GST led to increase in compliance costs and other operating costs as most of MSMEs were brought into the tax net as over 60% of them were not ready for the new tax regime,” said the report in August 2018.

Earlier this year, a leaked report of National Sample Survey Office had revealed that India's unemployment rate hit a 45-year-high of 6.1% in 2017-18. This was the first comprehensive survey on employment conducted by a government agency after Prime Minister Narendra Modi announced note ban November 2016.

However, the government had rushed to defend itself saying the leaked data came from a draft report, which was not a final one.

In April this year, when India was in the midst of national elections, a fresh study conducted by the Centre for Sustainable Employment (CSE) at Azim Premji University said that 50 lakh men lost their jobs between 2016 and 2018, and the beginning of the decline of jobs coincided with demonetisation in November 2016.