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Demonetisation had no effect on economy, says Nirmala Sitharaman days before Budget

Finance Minister Nirmala Sitharaman, who will be presenting her first budget on 5 July, said the Modi govt was focusing on reforms to boost India's high growth.

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New Delhi: India still continues to be the fastest growing economy and demonetisation has had no effect on the Indian economy, Finance Minister Nirmala Sitharaman told the Rajya Sabha on Tuesday.

The minister, while responding to supplementaries during the Question Hour, said the manufacturing sector has had a certain fall, but it is not attributable to demonetisation.

She said economic growth is high on the agenda of the Government and various reforms are being undertaken in many spheres to improve GDP growth.

Sitharaman said the moderation in growth momentum in 2018-19 is primarily on account of lower growth in ‘Agriculture and allied’, ‘trade, hotel, transport, storage, communication and services related to broadcasting’ and ‘public administration and defence’ sectors,” she said.

“If the impact of low growth in certain sectors has impacted growth rate, particularly in agriculture and allied activities as also in financial and real estate and professional services, there has been a fall, particularly in agriculture based on third advance estimates, it is believed that there has been a 0.6 per cent decline in the output.

“If the impact on the low growth is because of outcomes from these sectors, the manufacturing sector has had a certain fall but which is not attributable to demonetisation,” the minister said.

Also read: Demonetisation gain takes a hit as income tax e-returns drop by 6 lakh in 2018-19

She said in the last quarter, there could have been a fall and steps have been taken to improve the economy.

“But, we are still the fastest growing economy,” she said.

Sitharaman said if the United States’ growth has grown between 1.6, 2.2, 2.9 and 2.3 per cent in 2016, 2017, 2018 and 2019, and China’s growth has also decelerated from 6.7, 6.8, 6.6 and 6.3 per cent, India is still well above 7 per cent at 7.3 per cent growth.

“While the concern of member is well taken about the last quarter’s growth having come down, it is still India which is growing at the fastest rate and the figures are before us,” she stressed in response to a query from a member.

The minister said as regards steps taken, the government has taken several steps in order that more money goes to people and that is why the PM’s Kisan Samman Yojna, the Pension Yojna, where money goes directly through DBT into the people’s hands, are activities through which people are getting the benefit.

“Over and above that, in order that institutions will have to extend more credit facilities for industry and for those entrepreneurs in the ground, the credit situation and also taking care of resolutional stressed assets through banks is also happening,” she said.

In her written reply, the finance minister said, as per estimates available from Central Statistics Office, Growth of Gross Domestic Product (GDP) at constant prices was 6.8 percent in 2018-19, as compared to 7.2 percent in 2017-18 and 8.2 percent in 2016-17.

“Economic growth is high on the agenda of the Government.

Various reforms are being undertaken by the Government in many spheres to improve GDP growth. The key reforms in Governments new term include expansion to all farmers the cash transfer scheme ‘PM-Kisan’ providing an income support of Rs 6000 per year, which was earlier limited to farmers with a land holding of less than 2 hectares,” she said.

Along with this, the Government has launched voluntary pension scheme for small and marginal farmers and small shopkeepers or retail traders, she claimed.

To give focused attention to issues of growth, Government has constituted a five-member cabinet committee on investment and growth chaired by Prime Minister.

Also read: Demonetisation was not at all a disaster, led to greater tax compliance: Sanjeev Sanyal


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  1. Her justification quoting figures such as 7 percent growth rate is highly misleading. Independent and foreign experts have ripped apart such fudged figures. Most are of the opinion that the real growth rate is somewhere around 3 percent which is disastrous by any standards. Befooling people by repeatedly lying seems to be the policy of this govt. All of them worship Geobells to the hilt.

  2. May be she meant “Demonitisation” did not effect her. Majority of citizens paid heavy price standing in queues to withdraw their hard earned money. What growth she is talking about. Rubbish!! What we have seen all this time is Jumlabaazi & wasting public money (crores) on building statues

  3. No, demonetisation had no effect on the economy , only on the informal sector, which we don’t recognize as being part of the economy , says SItharaman !

  4. A second term is always an opportunity to effect major mid course corrections, including change of personnel, without feeling awkward. The past is treated as a closed chapter. So it may have been better not to justify demonetisation or other initiatives that have not gone well. Manufacturing, core sector growth, GST collections, any pilot would get distracted by the number of red lights flashing on the control panels.

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