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The current Indian government led by Prime Minister Modi has acted on several fronts in order to improve the health and state of the economy. Two of the steps : GST and Demonetisation – have both been acclaimed and criticised. If you were part of the finance ministry of the country, how would you have executed these ideas ?
The Modi government has done brilliantly with both the schemes of GST and Demonetisation. But no Scheme is flawless. no one questions the creditability of the scheme but i personally feel the scheme could have been implemented in a better manner.
to begin with demonetisation- Modi govt had planned demonetisation for over an year. Inspite of that they started printing the notes only after Urjit Patel took over the position of RBI governor i.e. in the month of September. i would have suggested to start the printing of notes a little bit earlier. As the RBI printing rate is aprrox 3000 million per month while the govt aimed to remove almost 20000+ million notes from the economy.
I know few of you might have the question that rolling out so early could have warned the people but to defend myself. PM Modi should have let the people know that he plans to bring about new currency denomination in circulation much before. So that the banks could have equipped themselves. To clarify myself:
printing of new currency starts from say august considering the same rate 4months : 12000+ million notes would have been printed by November.
PM Modi announces that new currency shall start circulationg from Nov 15 (say) and banks will be given a buffering period of 15 days i.e from Nov 1 to 15 to equip themselves and their atm’s with new currencies.
I consider the major problem that the public faced was demonetisation and rolling of new currency taking place simultaneoulsy. This wasn’t suppose to be a joint process. Had it been done seperately it would have created less trouble.
Both the Schemes were executed appropriately ,but there were some steps which could have ease both the schemes more effectively .
Demonetisation.
The government must be given full credit for maintaining the secrecy of demonetization. But they should have not change the size of the note . The mechanism of the ATM was developed according to the size of old notes . The recaliberation of ATMS led to further decline in time and many ATMS faced Technial problem. . If the size of notes had been kept same , government could have effectively circulated the notes through ATM without causing any delay .
Even GST has its own Drawback .
Gst rate associated to various consumer goods were higher which had to be changed after two months of gst rollout, which created confusion . As the government was planning to implement gst since 2 years , they could have focussed on all this in a much better way.
Time to file gst return for initial months should have been postponed for some months and had allowed small business houses to get familiar with its process.
This changes could have been brought up
Modi government has taken amazing initiatives of GST and demonitisation to make improvements in the health and economy of the country. But I personally feel that implementation of both the schemes should have been more planned. Crashing 500 and 1000 rupee notes in just few hours have definitely helped to remove black money but at the same time it has also put lot of innocent poor people in huge problem. We should not forget that we are still living in a country where there are many people who don’t have access to banks and they run there living in daily wages basis, also there mere savings can also be in form of 500 and 1000 rupee notes. Also since printing of new notes was not in balance with the demands of the currency often it was seen that ATMs ran out of cash and public had to suffer a lot.
Undoubtedly this gave a boost to digital payment platforms like Paytm but in the initial days not everyone was familiar with this, thus the small shopkeepers had to suffer a lot as cash was the only medium of payment for them and public was struggling for currency.
On the other hand implementation of GST, different merchants were not well informed about the tax rate that they have to levy thus they were not capable of generating a GST invoice for the same. On the other hand customers specially who had an GST Number demanded for an GST invoice from the merchants because basis to that they can get there GST refunded. Thus this caused a ruckus.
@ Ashay – good analytical approach ! If you can support it with numbers, then the approach could have been even better. +3 :good:
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