Union Government has published the quarterly estimates of the Gross Domestic Product(GDP) for October to December 2016. It said the GDP grew by 7 percent for the October to December 2016 period, in comparison to the same period in 2015 despite the Demonetization announced by Narendra Modi in November.
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By this government says there is no impact of Demonetization on Economic Growth. The government says that Private Consumption went up by 10% during that quarter which is almost impossible to believe. The government had almost flushed out 86% of the total Cash in the form of 500 and 1000 Notes and imposed restrictions on Cash Withdrawals.
In no way, people would have spent so much especially when the people were afraid of spending the cash with them and hoarded as much as possible. According to the government figures, cash accounts for about 78 percent of all consumer payments. That literally rules out any sudden shift in cash-less transactions even though there is a slight spike.
The decrease in the Public Consumption is evident from the fact that the state governments’ incomes dipped to an all-time low. Looks like Modi government is just fudging the numbers to say Demonetization did not impact the economy and actually did good in eradicating black money whatever may be the quantum.
