Finance Minister Arun Jaitley said today that the impact of structural reforms is "behind us" and the early economic indicators point to an improvement. Structural reforms like demonetization and the roll out of the Goods and Services Tax would have had some consequences, but they will help the economy, in the long run, he said.
"Having undertaken two major structural changes which are extremely important for the Indian economy, I think the impact being substantially behind us, the early indications for the future look to be positive," he said at the India Today Conclave here. In the last 2-3 months the Purchasing Managers' Index (PMI) data has come out positive, similar to industrial output and core sector growth, he said, adding that these are some of the early indicators and "probably point to an improved situation."
Prime Minister Narendra Modi had on November 8 last year announced the demonetization of old Rs 500 and Rs 1,000 notes to combat corruption, black money, terrorism and fake currency. On the criticism that note ban has impacted growth, Jaitley said: "If you don't have the capacity or courage or broad shoulders to undertake those structural reforms, then of course, that status quo would have continued. "And the status quo ante that existed in India, I don't think that is an ideal situation where India would have lived to be."
Jaitley said India was a fast-moving global economy for three years in a row and the time was opportune to undertake structural reforms. "Otherwise, the only option to structural reform that my predecessor could give you is policy paralysis, not my choice." The economy slowed to 5.7 per cent in the April-June quarter of the current fiscal, the weakest pace since 2014 as demonetization sucked out 86 per cent of the currency in circulation throwing cash-dependent businesses in disarray and the implementation of GST from July 1 hit small and medium enterprises.
The GDP growth had started to slip in the quarters before demonetization, he said, adding that the manufacturing activity declined in the run-up to the GST roll out from July 1 as businesses started destocking their goods.