Finance Minister Arun Jaitley on Sunday hit out at “critics and cynics” who said that the implementation of the Goods and Services Tax led to an economic slowdown, PTI reported. Jaitley said the “disruptionist” impact on growth lasted only two quarters, as he called the new indirect tax structure a “monumental reform”.
Jaitley’s remarks came a day after former Reserve Bank of India Governor Raghuram Rajan said the launch of the Goods and Services Tax was one of the reasons that India’s growth rate slowed in 2017. Rajan said the current growth rate of 7% is insufficient to meet the country’s needs.
Speaking through a video link at an event to mark the 100th anniversary of the Union Bank of India in Mumbai, Jaitley said: “You will always have critics and cynics who will come up and say it [GST] slowed down India’s growth.”
He noted that growth had slowed for two quarters, but then accelerated to 7%, 7.7% and 8.2% in subsequent quarters. The current growth is much higher than the expansion of “5%-6%” during 2012-’14, Jaitley said.
Jaitley also said: “To maintain the strength of the banking system and help India grow, we need to minimise our NPAs [non-performing assets]. Various, multiple options have been exercised.”
Months after the government demonetised high-value currency notes in November 2016, growth of India’s Gross Domestic Product declined to a three-year low of 5.6% in April-June 2017. Growth remained subdued because of glitches and hiccups during the implementation of India’s largest tax reform, the Goods and Services Tax, which came into force on July 1, 2017. The GDP growth has accelerated gradually since – to 6.3% in July-September 2017, 7% in October-December 2017, followed by 7.7% in January-March 2018 and a two-year high of 8.2% in April-June 2018.