By now, it is generally realised, even within the Union government and the ruling BJP, that the ill-advised demonetisation of currency to the extent of 86% of its value played havoc with the economy. Every citizen and every sector of the economy — industry, trade, agriculture, transport, ports, airports, hospitals, cinema halls, hotels, restaurants — was hit by a lack of cash. For about two months, beginning November 9, the entire nation was visibly battling either the bank queues or suffering some other consequences of note ban. The impact was too obvious and the disruption was almost complete. The markets had very few customers, inventories with the producers or the dealers were building up while casual labourers in cities had gone back to their villages where farmers were left with rotting potatoes and other crops disposed in distress sales. Those arguing about the impact being limited to informal sectors should illustratively take a look at the falling sales of two-wheelers, large advertising campaigns being put on hold and investment plans being pushed to the backburner with the result that instead of creating new jobs, the industry and trade were finding it difficult to retain the existing strength.
But the Union government and the Central Statistical Organisation would like us to believe that all the impact being loudly talked about was “anecdotal.” According to them, 7% growth for the October-December quarter was more authentic, based on “empirical” data. For the entire fiscal 2016-17, the Indian economy is supposed to be growing at 7.1%, still the fastest among the major economies. Though the GDP had grown by 7.9% in 2015-16, 7–7.1% growth is pretty good in the face of disruptive demonetisation. But more than disruptive, Prime Minister Narendra Modi downward to Finance Minister Arun Jaitley and other ministers would rather like the nation to believe about its “long-term” positive impact. They even taunted internationally acclaimed economists, pitching “Harvard-wallahs” against “hard working” Indians, especially within the government after the CSO released the GDP data on February 28.
It is nobody’s case to treat the CSO data as “fudged,” but certainly the data is too broad-based yet selective and omits a large section of the economy. Technicalities do not interest the common citizen whose legitimate question is: how come manufacturing remained robust when industrial growth was a meagre 0.2% in Q3 of 2016-17. Agriculture stands out with 6% growth in Q3, but the paradox is that the rural stress is too evident to be buried under the data which is of least interest to distressed farmers.
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