In the past 5 years, Indian economy has seen a lot of ups and downs; from the shock of demonetization to the landmark GST implementation, Indian economy has seen it all. The year 2018 becomes all the more important for Indian stock markets as the country prepares for election in 2019. Let’s take a look at the three landmark events which have impacted Indian economy.
Demonetization of Rs 500 and Rs 1000 notes
In the year 2016 on November 8th, Prime Minister Narendra Modi has announced his decision to withdraw Rs 500 and Rs 1000 bank notes to initiate a crack down on black money. As a replacement, the government issued new Rs 500 and Rs 2000 rupee notes. In the next few weeks, RBI introduced quite a few rules associated with withdrawal limit, money exchange and deposits. Raids were conducted and the national banks were scrutinized. According to many, it was one of the boldest financial reforms and the government claimed that it would bring long-term benefits. The response of demonetization was mixed as many questioned about the effectiveness of this event.
The Passing of the GST Bill
In a unanimous decision, Rajya Sabha approved the 122nd Constitutional amendment to turn Good and Services Tax into law. Before GST, most businesses had to pay 3 different taxes – VAT, excise and service tax. With the implementation of GST, there was uniform taxation across the country. With this reform, the big enterprises attained the same footing with SMEs. The entire idea of GST was to simplify the tax complications of the entire economy. All services provided by the educational institutions both schools and colleges are exempted from GST. Along with healthcare, this is one sector which has been put within minimum or zero tax bracket.
The Frauds in the Banking Sector
The Indian banking sector has lost about Rs 18, 170 crores in forgery in the financial year 2017-18. Some of the top banks like PNB, Bank of Maharashtra, HDFC and ICICI faced a large number of frauds. This completely altered the face of the economy and called for an urgent requirement to tighten the internal financial controls. Most importantly, there was a call for better audits; the process gaps need to be addressed and emphasis was put on continuous rationalization checks and balances.
The next year is expected to be peppered by political anxiety due to various state elections in 2018 and general elections in 2019. The economy will remain jittery due to surge in global oil prices . Only time can tell how India plans to cope with these external pressures.