Demonetisation did not see 2 percent dip in the economy: Arun Jaitley

A day after data showed India's key infrastructure sectors growing at their fastest pace along with sustained acceleration in manufacturing, Finance Minister Arun Jaitley on Tuesday said demonetisation did not see a 2% dip in the economy nor did it induce any agrarian crisis as apprehended.

“In fact the whole debate surrounding demonetisation proved wrong. It isolated obsolete ideas,” Jaitley said at the ICICI Bank's Digital Village adoption programme. Jaitley said Indian economy also did not see any lack of demand due to demonetisation.

His statement was supported by the just-released manufacturing PMI which showed country's manufacturing sector had shown a robust growth for the fourth month in a row in April. One of the key arguments against demonetisation was that it would impact the economy by about 2 percentage points and derail job creation.

But an industry report recently showed that India created 1,22,000 jobs in October-December quarter of 2016, the period when demonetisation was at its peak. Ecoscope report released by Motilal Oswal group late last month showed that employment generation in the third quarter (Oct-Dec) of 2016 was more than the previous six months (April-September) of the financial year 2016-17.

Sectors such as manufacturing, construction, trade, transportation, hospitality, IT, education and health saw the maximum jobs growth in the period. These sectors employ more than 80% of India's population. Jaitley said the reforms under Prime Minister Narendra Modi-led government have also laid to rest the debate on 'whether economic reforms have a political cost'.

“This debate has been going on in the country for decades and previous governments have often rolled back economic reforms due to ... cost. The roll back always happened because reforms never reached the villages. But today it is changing. The villagers feel that they too are included in the reforms process and the debate is slowly disappearing,” he said.

At the event, India's largest private sector bank ICICI Bank announced it would transform 100 villages into 'Digital Villages’ in as many days.