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Demonetisation led to economic slowdown: Bengal FM Amit Mitra

"Seventeen reasons were given to justify demonetisation, but none of those hold good. There is more cash in the system now than there was before demonetisation," says Amit Mitra.

ET Bureau|
Nov 22, 2019, 07.20 AM IST
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Mitra said the country’s economy was facing 'growth recession' with most sectors of industry contracting.

New Delhi: West Bengal finance minister Amit Mitra called demonetisation a massive structural attack on the fundamentals of the Indian economy that he said drove the country’s economy into the grip of a slowdown. “It was a 'Tughlaqi' hara-kiri. It broke supply chains MSMEs collapsed,” Mitra said on Thursday.

He said the country’s economy was facing 'growth recession' with most sectors of industry contracting. “This is a policy induced slowdown,” he added. Seventeen reasons were given to justify demonetisation, but none of those hold good, he said. There is more cash in the system now than there was before demonetisation, he added. Mitra said there was a trust deficit and investor confidence was on the decline. “Decline in new investments as per data shows lack of investor confidence in the governance of the Indian economy,” he said.

GST COMPENSATION
Mitra said states were being forced to resort to borrowing because of a delay in payment of compensation in lieu of revenue loss due to goods and services tax by the Centre. He said as much as Rs 40,000 crore in compensation was due to states till October. “The Centre must immediately hold a GST Council meeting so that the issue can be discussed,” he said, adding that state governments could not borrow indefinitely. “This is in violation of the federalist policy of the country this is uncooperative federalism,” he said.

He said GST-related frauds had also risen because of implementing the tax system without preparation. West Bengal and four other non-BJP states had issued a joint statement on Wednesday on the delay in compensation payment to states.

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