Slowdown due to wrong policy moves like demonetisation, GST: Amit Mitra

West Bengal Finance Minister Amit Mitra | File photo

Launching a scathing attack on the NDA government, West Bengal Finance Minister Amit Mitra on Thursday said the current slowdown is a result of wrong policy decisions like demonetisation and hasty implementation of GST.

"In the modern history of development economics, there has never been a case where wrong policy, arbitrary policy, pre-mature policy led to throwing off the track a growing economy. Economy was growing at 8.1 per cent before demonetisation," he told reporters here.

Economic growth hit a six-year low of 5 per cent in the first quarter of the current fiscal.

"Demonetisation was a massive structural attack on foundation of economy. Within seven months comes second policy attack. GST was launched without relevant preparation creating massive problems in the economy," he said.

Terming demonetisation as "Tughlaki harakiri of wrong policy", he said there was no clear cut justification for it as the government itself changed narrative 17 times during the period.

"Objective was to bring back black money but nothing happened," he said, adding that cash in the economy has gone up more than the pre-demonetisation levels, indicating higher corruption.

The pathetic state of the economy is not a business cyclical correction but due to loss of faith and trust, Mitra said.

The current slowdown is policy induced, he said, adding the government has to look at broken trust and faith.

Expressing concern over delay in GST compensation payments to states, Mitra said the Centre is not following cooperative federalism but uncooperative federalism.

When the Goods and Service Tax (GST) subsumed 17 different central and state levies from July 1, 2017, states were promised that they will be compensated for any loss of tax revenues for five years due to the introduction of the new levy.

The compensation was to be paid on a monthly basis but the same has not bee released so far for the months of August and September and that of October would be due soon, he said.

In all, some Rs 10,000 crore is due to five states, Mitra said, adding BJP-ruled states too would not have got compensation but they have not yet spoken about it.

"It cannot happen that one state will get and other would be denied. If one state gets, means all will get," he added.

Mitra also said he has written to Union Finance Minister Nirmala Sitharaman urging her to urgently hold a GST Council meeting on the issue of falling revenue collections and rising frauds under the new tax regime.



Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel