New Delhi: Buoyed by higher-than-expected GDP growth, finance minister Arun Jaitley on Wednesday said a 7 per cent expansion in third quarter belies exaggerated claims of note ban impact on rural economy.
Mr Jaitley, who returned from his UK visit this morning, seemed to agree with Urjit Patel’s assertion of a sharp V-shaped recovery as remonetisation picks up.
The third quarter of fy 2017 was “substantially impacted by demonetisation (of higher denomination currency),” he said.
“Demonetisation, admittedly, had led to the squeeze of currency because this was the period during which the replacement of high denomination currencies was taking place and many people were apprehensive to what its impact on overall growth would be,” he said.
But, with a 7 per cent growth in gross domestic product (GDP) the worst fears for the economy have been put behind, he added. “I had consistently maintained that the revenue (tax collection) figures, which actually show the real level of growth, indicated that the growth was there, and some areas could be adversely impacted, particularly those which were cash dominated and also a part of the shadow economy and even constituted parts of the informal economy,” he said.
But demonetisation has helped integration of informal with the formal economy, he said, adding the money that was deposited in the banks is now being spent through a system which is being recorded. “And I think, the GDP data for Q3 really reflects that position,” he said.
