Demonetisation, GST and Covid-19 cost Indian economy Rs 11.3 lakh crore: Report

It is estimated that 63 lakh informal enterprises will shut down between 2015-16 and 2022-23, leading to the loss of about 1.6 crore jobs. Demonetisation, GST and Covid-19 cost Indian economy Rs 11.3 lakh crore: Report

The cumulative impact of macroeconomic shocks is estimated to cost the Indian economy Rs 11.3 lakh crore between 2016 and 2023, rating agency India Ratings and Research reported in The Hindu on Wednesday. This loss is in addition to the loss of 1.6 crore jobs in the informal sector.

The economy faced three primary shocks over the eight-year period of assessment: demonetisation of high-value currency notes in 2016, the implementation of the Goods and Services Tax in 2017 and the economic slowdown caused by the Covid-19 pandemic in 2020.

The agency said the economic loss from these is equivalent to 4.3% of India’s GDP in the financial year 2022-23.

These shocks had a “severe impact” on the informal sector. According to the rating agency, an estimated 63 lakh informal enterprises closed between 2015-’16 and 2022-’23 and about 1.6 crore jobs were lost.

The newspaper quoted Sunil Kumar Sinha, the chief economist of the rating agency, as saying, “This period coincides with an increase in formalization of the economy, which has led to a strengthening of tax collection.”

Sinha said, “Although formalization of the economy is the way forward, the reduced presence of the unorganized sector will impact job creation.”

The India Ratings and Research report is based on the annual survey of unorganized sector enterprises released by the Ministry of Statistics and Program Implementation on July 5.

The ministry’s survey said the total number of enterprises in the non-agricultural sector increased from 5.97 crore in 2021-22 to 6.5 crore in 2022-23. During the same period, employment generated by the sector increased from 9.79 crore workers to 10.96 crore workers.

However, in 2015-16, before the first economic shock of demonetisation, the sector employed about 11.13 crore workers, reports The Hindu.

In the absence of the macroeconomic shocks that began in 2016, the total number of non-agricultural enterprises in India would have been 7.14 crore in 2022-23. This is based on the growth pattern seen in the economy between 2010-11 and 2015-16.

The number of workers employed in the sector will increase to 12.53 crore, the report said.

According to the rating agency, the gross value added to the economy by informal enterprises in 2022-23 was still 1.6% lower than in 2015-16.

Gross value added is the economic value that producers add to their goods and services. When a producer sells his goods, his income from the sale should be more than his cost. The difference between the two is the value added by the producer.

Courtesy : Hindi News