The 2017-18 Economic Survey was tabled in the parliament today by Finance Minister Arun Jaitley, and what made it more intriguing was that it was coming in the backdrop of, two of the most disruptive changes witnessed by the Indian Economy.
These two changes being, Demonetisation of Rs 500, Rs 1000 notes post 8th November 2016 and the roll out of Goods and Services Tax, which were projected by a section of doomsayers to have an adverse impact on the economy. This though was rubbished by IMF chief Christine Lagarde who asserted that the slowdown due to these measures, was merely short term.
Today the Economic Survey not only rubbished the doomsayers by projecting a healthy 7-7.5% growth rate for the 2018-19 fiscal, and also asserted that an economic revival was on the cards. Apart from this, one of the salient points of the Economic Survey has been the positive impact of Demonetisation and GST in increasing the number of taxpayers.
But since virtually every year has seen a growth in the number of taxpayers, the whole addition can’t be attributed to these reforms. Hence taking the general growth trend into account, it was noted that there was a 0.8% monthly increase in the number of taxpayers which turns out to be 10% every year. Factoring this, the growth in 2016-17 actually turned out to be 31% more than the regular trend, which is about 1.8 million additional tax payers.
This increase in taxpayers has been credited to both demonetisation and GST. With demonetisation directly impacting someone’s income, it is understandable that people were forced to register and declare their earnings. But when it comes to the GST which is essentially an indirect tax, the way it might have played a role would be the, earlier unregistered taxpayers having to show white income, which of course meant they had to register under income tax also or else a disparity would have been noted.
Such an impact is in lines with the promised advantage arising out of these scheme, which was increased formalisation of the economy resulting in more Indians coming under the tax net, a cumulative of which we might continue seeing in the years to come.