He also exuded confidence that “we will soon come out from these two policy experiments” and regain growth.
“I think that deceleration in growth, if you look at numbers, actually preceded before these two actions. I think that not just growth, but investment, credit, exports, industrial production, they all started decelerating sometime in the second quarter last year,” he said during an interaction with media here today.
“So, it certainly began before. It’s quite possible that these two steps (demonetisation and GST) reinforced the deceleration…I think we will soon come out from these two policy experiments and get back to the growth path,” he said.
“GDP would bounce back with better credit growth, investment growth and growth in exports, as Indian economy has the potential to grow at 8 to 10 per cent. As GST is also stabilizing, it will also help in that,” he said.
“I think that we still need to work more to reduce the compliance burden on SMEs. And these are being worked upon. It’s an ongoing process,” he said.
On bringing petrol and diesel under the GST, he said ideally every thing should come under the new tax regime.
“I think that it’s absolutely desirable objective that all that has been left out today should at some point come under GST…In principle, everything should come under GST, be it petroleum, electricity, real estate and of course, at some stage, alcohol,” he said.
To a question about allegations by the Opposition that India is experiencing “jobless growth”, Subramanian said three key job generating sectors are under stress.
He, however, declined to comment further, saying there is not enough data to make an assessment.
“Our employment data are not reliable enough to make a sincere assessment…Niti Aayog has come up with a new method of collecting that data. Once that happens, we will be in much better position to make an assessment,” he said.
“In the boom period, three sectors did good — agriculture, IT and construction. These were big job generators. I think in current environment, IT is under stress for bunch of reasons,” he said, adding that same is the case with the other two sectors. “So, these sectors have to improve for job creation to pick up,” Subramanian said.