Demonetisation and faulty implementation of the GST have caused a loss of Rs 4.75 lakh crore to the country’s economy, West Bengal Finance Minister Amit Mitra said on Friday.
He also criticised the Centre’s initiative to extend up to Rs 1 crore loan to micro, small and medium enterprises (MSMEs) in 59-minutes, saying it was just a gimmick and he has not come across anyone who has received a loan through the portal.
As a result of the faulty implementation of the Goods and Services Tax (GST), the states earned Rs 78,929 crore less revenue since July 2017, which has been compensated by the Centre as per compensation law of the new indirect tax regime, he said.
“The government at Centre believes in chest thumping, hit and miss decision making, disastrous decision making and failure decision making … There is an economic uncertainty in the minds of small businesses,” Mitra said addressing a press conference at the India International Trade Fair (IITF) here.
Speaking about demonetisation of high-value currency notes on November 8, 2016, Mitra said it has hit farmers and unorganised sector of the economy badly since their business mode was cash dependent.
He said even developed countries like Japan and Switzerland have higher cash to GDP ratio than India.
“How much GDP has been lost to India due to demonetisation and GST? It is Rs 4.75 lakh crore,” Mitra said, he said that economic growth has slowed down from 2015-16 onwards and to achieve that high level of growth India would need at least four years.
India’s GDP growth declined from 8.2 per cent in 2015-16 to 7.1 per cent in 2016-17 and further to 6.7 per cent in 2017-18. The economic growth is expected to improve to 7.4 per cent in the current fiscal which ends in March 2019.
Mitra said that even consuming states are suffering revenue loss on account of GST implementation. Since there is no matching of invoices in GST, people are falsely generating invoices and claiming input tax credit, leading to hawala transactions.
Earlier this month, the government launched a portal to sanction loans of up to Rs 1 crore in just 59-minutes to GST-registered MSMEs.
“I have not heard of anybody who has got loans from that portal. In fact, MSMEs are worried that if they go through the portal, they will be chased later. They are suspicious about it. If the scheme means only giving in-principle approval, then how does it benefit the MSMEs,” Mitra said.