Mumbai: The GST implementation was a "monumental reform" that impacted growth negatively only for two quarters, Finance Minister Arun Jaitley said on Sunday, hitting out at "critics and cynics" who blame it for hurting the GDP expansion.
The remarks come a day after former RBI Governor Raghuram Rajan blamed the indirect taxation reform for derailing the India's growth story. Jaitley did not name Rajan.
"You will always have critics and cynics who will come up and say it (GST) slowed down India's growth," Jaitley said, speaking at state-run Union Bank of India's 100th anniversary celebrations event here over a video link.
The finance minister said after suffering for two quarters, growth increased to 7 per cent, then to 7.7 per cent and went up till 8.2 per cent last quarter and specifically pointed out that this is much higher than the 5-6 per cent expansion achieved between 2012-14.
The Goods and Services Tax (GST), India's biggest tax reform since independence which came into force on July 1, 2017, had "disruptionist" impact on economic growth only for two quarters, he said.
On Saturday, Rajan had said that the twin shocks of demonetisation and subsequently GST were the two major events that held back India’s economic growth in 2017.
Rajan also said that seven per cent growth rate is not enough to meet the country’s needs. “The two successive shocks of demonetisation and the GST had a serious impact on growth in India. Growth has fallen off interestingly at a time when growth in the global economy has been peaking up,” he said.
Jaitley also said there is a need to bring down non- performing assets (NPAs) in the banking system in order to strengthen the banking system and support growth.
"To maintain the strength of the banking system and help India grow, we need to minimise our NPAs. Various, multiple options have been exercised," he said, adding, experiments are bringing results certainly.
Strength of the banking system has to be improved so that liquidity in markets is maintained, Jaitley said.
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