Gst, Demonetization and Unemployment in India

Not easily can one forget the Ghazi attack , where Indian navy’s INS Vikrant had to face numerous foray by the submarine Ghazi , to be conquered. The Indian economy , from the months of November to July , had to face some substantial metamorphosis ,those whose repercussions continue till date.

On November 8 , 2016 , India was left in the state of consternation by the steps of the man referred to as the nation’s alma mater. Demonetisation , or to which some commonly address to as “demon” , pun intended , was referred to as the ‘midnight detonation’ , torpedoed black money’s stature in the India economy.

While the citizens were rehabilitating from the haywire caused by the demon , came in another corollary act of the government , the Goods and Service Tax. That is , before the people could come back on their feet after huge amounts of wreckage caused by the previous move of the government , the government dropped another grenade.

Both the acts of the government had rather significant impacts , in the short as well as the long run.

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Starting from the ordeals of long queues outside the banks , to the perplexing gst procedures together contributed to causing great amount of inconvenience to the common man. But these are just the scratching of the shell , looking into the matter deeper, the predicaments that have surmounted are much more alarming. One among the major being unemployment , which India is already familiar with. Like every other topic there are conflicting views on the aftermath of gst and demonetisation on employment.

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Some who are in support of the government policies , point out to the Employees Provident Fund Data , that depicts growing job rates. Contrarily , others bring to light the household surveys which highlight the condition of deteriorating job rates.

The Business Standard reported that unemployment rate is at a 45 year high of 6.1 percent. Whereas , if the current weekly approach of NSSO is taken into consideration , that defines the status one week before the survey is conducted , the rate stood at 8.9%. As mentioned , “The figures show the double-whammy effect of demonetisation and the GST on jobs. ”

The Centre for Monitoring Indian Economy has revealed that more than 1.5 million jobs were lost in the stretch of January-April ’17 . The labour force participation rate (LPR) has also taken a downturn , which is a sign of economic slowdown for a developing country like ours . The surveys conducted by The All India Manufacturers’ Organization (AIMO) also concluded that the economy witnessed a 60 percent drop in employment and 55 percent loss in revenue. The withdrawal of 8.6 million from the economy , was a major hit to the business as major part of “CASH IN HAND” was taken away. The lack of availability of cash in hand was one of the biggest ordeal that the business suffered. Small and Medium enterprise sector (SME) , which comprise of a major part of economy , contributing to 8% of the GDP , experienced a fall in labour wages as wages in this sectors are largely paid in cash. The low wages contribute to unemployment , by reducing purchasing power and thus a decline in demand. The Manufacturing sector , that comprises of large amounts of skilled and semi-skilled labourers , witnessed large amounts of layoffs.

Keeping in mind the dwindling investments , Mahesh Vyas, the managing director of CMIE , states that “The effect of both these shocks has played out over a steady fall in investments. The steady fall in investments had reduced the rate at which new jobs were being created and the two shocks reduced the jobs on hand. The combined effect of these factors was the steady fall in employment,”.

On one hand , where demonetisation caused cash crunch , GST brought in predicaments through the structure which we accurately call out be ‘labyrinthine’ .

The small firms was one among the major sector that was crumbled in the hands of GST , due to lack of availability of amenities for successful understanding and implementing the perplexing tax . Big firms and enterprises , still could shake off the initial difficulties due to available resources . Yet again Indian economy defying the science by survival of the richest , rather than the fittest .

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Gst, Demonetization and Unemployment in India. (2022, Jan 08). Retrieved from

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