Study Material | Test Series
Drishti IAS
call1800-121-6260 / 011-47532596
Drishti The Vision Foundation
(A unit of VDK Eduventures Pvt. Ltd.)
prelims Test Series 2019
बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Demonetisation and GST: Comment on impact of demonetisation on implementation of Goods and Service Tax.
Dec 15, 2016 Related to : GS Paper-3

Ans :


Implementation of the goods and services tax (GST) would appear to be postponed due to spill-over effects of demonetisation. The GST council failed approve the revised draft laws for central, state and integrated GST due to mistrust between the Centre and the states and uncertainty over the spill-over effects of demonetisation.


  • According to few states, demonetisation has created mistrust between centre and states as it created some sort of uncertainty.
  • Some state governments are arguing that demonetisation will results in a prolonged slowdown in the economy, revenue growth would take a hit.
  • According to GST law, central government needs to compensate states the loss that states suffers due to GST. If revenue growth slows down, then it will be difficult to compensate states.
  • There either would be a reduced amount left for central expenditure or the government would have to suffer a higher-than-planned fiscal deficit.   


  • Central government needs fasten process to solve the issues resulted out of demonetisation.
  • Required currencies need to be brought in market, to contain the slowdown of economy and uncertainty.
  • The Centre has to compensate the states for any shortfall in revenue due to both GST implementation as well as demonetisation.


Currently it appears difficult that GST will be rolled out from 2017 financial year due to various reasons. Demonetisation has again created some sort of uncertainty and it may cause delay in implementation of GST. In this background centre has to take proactive stand and convince them that they will be compensated if any revenue loss due to demonetisation.

Helpline Number : 87501 87501
To Subscribe Newsletter and Get Updates.