The former Chief economic advisor of India, Mr Kaushik Basu said that there has been a drastically declining of inflation rate which is both good and bad. he told that “I mentioned that the declining of inflation creates issues in the development of the nation. The chief economic advisor stated that “I think inflation rate of 2 to 4% is good for the nation but still, there is a danger of falling inflation rate below 2%.”
If in case there is a continuous decline in it, there may be some issues in the development of the nation also there will be a risk of the growth rate going down. He also said that, for increasing the growth rate, the apex Bank of India i.e. the Reserve Bank of India (RBI) must decrease its Repo rates by 50% instead of 25%. He also mentioned that “I’m very happy with the RBI cut in the repo rate but if my opinion was taken then I would suggest a reduction of 50% in the base rate.”
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The chief economic advisor also said that due to the short term negative impact of the demonetization, there is still a danger of Growth rate falling below 6% in the next quarter or after this quarter. Chief economic advisor, Mr Kaushik Basu also mentioned that he is concerned about the decreasing growth rate in the short term. As the demonetization made a negative effect on the people and still they will have to bear its negative consequences in the upcoming months.
He assured that the goods and service tax and the Banking Regulation Amendment Bill Will create new avenues for the development of nation with fast and accelerating growth rate. Goods and service tax is an ambitious Tax regime implemented by the government to reduce the cascading effects of currently followed tax structure and to take some strict measures towards inflation and other unusual tax practices.
