Chief Economic Advisor (CEA) Arvind Subramanian has said that the series of reforms initiated by the government like demonetisation and the goods and services tax (GST) may have reinforced the growth deceleration that had already set in. Apart from the growth, he observed that investment, credit, exports and industrial production have also started decelerating sometime in the second quarter previous year. Therefore, he said that they will soon come out from these two policy experiments and get back to the growth path.
Subramanian further said that India’s GDP will bounce back with better credit growth, investment growth and growth in exports, as the country’s economy has the potential to grow between 8 to 10 percent and as new tax regime is also stabilizing. He said “I think that we still need to work more to reduce the compliance burden on SMEs. And these are being worked upon. It’s an ongoing process.” On the matter of bringing petrol and diesel under the purview of GST, he noted that ideally everything should come under the new tax regime and also feels that it is absolutely desirable objective that all that has been left out today should at some point come under GST.
Talking on the jobless growth in India, CEA has indicated that three key job generating sectors are under stress. However, he said that there is not enough employment data to make sincere assessment. Besides, he said that Niti Aayog has come up with a new method of collecting that data and once that happens, they will be in much better position to make an assessment. Moreover, he observed that in the boom period, three sectors did well--agriculture, IT and construction and these were big job generators. Adding further, he pointed out that in current environment, IT is under stress for bunch of reasons and added that same is the case with the other two sectors. Therefore, he stressed that these sectors have to improve for job creation to pick up.