Is it possible that Demonetisation and GST were introduced within a short span of time due to a reason?

There is a reason behind the hastiness of governmental moves. The swift yet imperfect execution might be one of the reasons why the move has failed to gain acceptance.

The Modi government is known for its shocking and surprising moves.  The demonetization move was the one that rocked nation the most. Though the move was aimed against black economy and terrorism the common man seems to have suffered the most. But the real impact of demonetization is yet to be felt. Though life of a common man was suddenly brought to a halt and the production and manufacturing industry also suffered, it is to be remembered that the move was only temporary. Notes of higher denominations were soon brought into circulation. It is true that the policy had ample shortcomings but these do not make up enough for the benefits that might be reaped through its implementation. So why was it suddenly dropped on us..or was it really sudden..this calls for a thorough inspection:

•  According to reports, in 2013, only 1% of the population paid their taxes. The rest who escaped, with money stashed at different places, are those who are targeted with this move. The shadow economy, which accounts for 20% of GDP, is weakening the economy and this move hopes to undo the damage. But it is not a policy out of the blue. The Modi government has promised to squeeze out black money and the procedures that followed were mere “walking the talk”
•             Also, such a surgical move had to be quick and secretive else it would destroy the meaning of the whole process. Had the ministry or anybody outside the ambit of the planning committee come to know of the new notes printing at RBI or the “demonetization strike” would locate means and points to deposit the illegally acquired cash.

•            The move is also meant to enable digitilization of the economy. The method of implementation has greatly helped the masses understand the need for moving over to digital economy. Had the move being cold and implemented in steps the masses would also develop a tendency to resist.

•          The economy cannot be cleansed in a single stroke or move. Measures complementing the motive of such a policy have been implemented earlier(opening of 25 crores Jhan Dhan account, eliminating middlemen, options for voluntary disclosure of income, to mention a few) and similar measures would follow soon. It must be perceived as a link in a chain that might have been displaced, yet essential.

Thus demonetization move has its reasons and so does GST. GST was not the brainchild of the current government. It was presented in 2006-2007Union Budget. The government has been unsuccessfully trying to implement it, until now. A lot of discussions have been undertaken yet the step wasn’t welcomed by the traders. It was accused of being a rash and quick move. But that is overstating it. Here’s how:

•             Inefficient and complex tax systems in the country have been constantly haunting the consumers. It is supposed to provide immediate relief to the consumer from the burden of loads of taxes he pays, not knowing what and not knowing why.

•             In fact, GST is also a means of the government to improve and cleanse the economy. Through electronic systems data entered can be constantly monitored/ accessed by government. It is also indicative of the upcoming digital era.

The government has itself accepted that the GST regime would not be flawless. It had agreed to discuss and solve any problems that may arise after implementation. Nevertheless the economy has been greatly affected.

From the present condition it can be deduced that the government is constantly trying to conquer growth with an economic structure that is not healthy enough to make giant leaps. These leaps look harmful and are posing huge problems to the economy. Should these leaps be avoided? Should its pace be slowed?  Maybe when taking those leaps the economy might get lean on its own, maybe not.. who knows?!