FM: Demonetisation debate proved wrong

 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 ICICI Bank’s Digital Village adoption programme.

Jaitley said the economy also did not see any lack of demand due to demonetisation.His statement was supported by the just-released manufacturing PMI, which showed that the country’s manufacturing sector had witnessed 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 two percentage points and derail job creation.

But an industry report recently showed that India created 1,22,000 jobs in the October-December quarter of 2016, the period when demonetisation was at its peak.

The Ecoscope report released by Motilal Oswal group, late last month, showed that employment generation in the third quarter (October-December) 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 maximum jobs growth in the period. These sectors employ more than 80% of India’s population.

Jaitley said the reforms under the Prime Minister Narendra Modi government have also laid to rest the debate on ‘whether economic reforms have a political cost’.