NOTE BAN : THE DIFFICULT 50 DAYS WITH NEW YEAR GIFTS
EDITOR ’ S DESK
NOTE BAN : THE DIFFICULT 50 DAYS WITH NEW YEAR GIFTS
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The demonetization on 8 November and 50 days th
of it ending on 30 December 2016 entailed great difficulties for the general masses . There was great chaos and disruption as 86 percent of the currency in circulation was pulled out at one stroke from the economy . It meant considerable political risks and offending BJP ' s core base of traders and businessmen . Some of the hardships to the general public could have been avoided by calibrating ATMs to new `2000 and `500 notes . Most banks ran short of cash in their rural and urban branches . There was little to reduce the problems of informal sector , labourers , farmers and small businessmen . The government frequently changed its stance by bringing a rain of regulations in short period of 50 days .
However , the people in general have endorsed the demonetization step of the government by braving serpentine queues in banks and at ATMs . Almost 120 people died in standing queues and no money was left with the public for a few days for carrying small day-to-day expenses . Withdrawal of bank notes of `500 and `1000 denomination caused disruptions in the cash intensive sector of economy . The Reserve Bank has revised down ward the growth of real gross value added ( GVA ) for 2016-17 to 7.1 percent from 7.6 percent . The Government has expected to raise `1,00,000 crore of additional taxes under Income Disclosure Scheme-II ( IDS-II ) which will fund Seventh Pay Panel Pay outs and recapitalization of banks . This will help in containing fiscal deficit of the year 2017-18 . The demonetisation has also improved government finances dramatically . It has mopped up a tax revenue of `6.21 lakh crore at the end of November 2017 compared to `5.3 lakh crore a month earlier , showing on increase of `91,000 crore . Overall taxes were up 47 % from a year ago . The government has not had to cut any spending so
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far due to shortage of revenue .
As a result of note bane the manufacturing contracted for the first time in a year in December . The PMI fell to 49.6 from 52.3 in November 2016 . Core sector output rose 4.9 % in November on the back of strong expansion in steel production and electricity generation . The eight industries that make up the core sector-coal , crude oil . natural gas , refinery products , fertilizers , steel , cement and electricity – have a 38 % weightage in the Index of the Industrial Production ( IIP ). The government feels that the economy has not suffered much because of demonetisation . However , There is sharp decline in growth in cement ( 6.2 %) and steel ( 16.9 %) output from October 2016 .
DROP IN INVESTMENTS
As a result of demonetization investments have fallen sharply as per data released by the CMIE . During the quarter ended December 2016 , investment proposals worth only `1.25 lakh were observed as against the average `2.36 lakh crore in the preceding nine quarters . Only 404 new investment proposal were observed . On an average only three projects could be announced per day in the post demonetization period against the average 7-8 projects previously . Projects involving investment worth `77.700 crore were stalled during the quarter .
REAL ESTATE FACING DIFFICULTIES
The Real Estate Regulatory ACT ( RERA ), Benami Property Transaction Prohibition Act , and GST Act have made the year 2016 as a watershed year . Demonetisation has further added wounds to the already suffering a slowdown in the real estate
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Economic Challenger // ISSN 0975-1351 / Jan . -March . 2017