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Posted on: November 11, 2018 at 22:12:35
EU Finance Minister Arun Jaitley spoke at the celebration of the 100th anniversary of the Union Bank of India, held in Mumbai, by video conference. (File)
Finance Minister Arun Jaitley defended on Sunday the Goods and Services Tax (GST) as a "monumental reform", a day after Raghuram Rajan, former governor of the Reserve Bank of India (RBI) ), criticized its implementation.
"There will always be critics and cynics who will say that (GST) has slowed India's growth," said Jaitley in addressing the 100th anniversary speeches of the Union Bank of India.
Defending the NDA government's decision to introduce the GST last July, Jaitley said it was being implemented smoothly and, although it had slowed the economy for two quarters, the country had grown increased thereafter.
To counter criticism of the implementation of the tax reform, Jaitley said, "The GST slowed growth for two quarters, but people do not know how that growth has increased since then."
The finance minister said the country's growth reached 7 percent, 7.7 percent and 8.2 percent in the last quarter. In particular, he pointed out that this growth was well above the 5 to 6% growth registered between 2012-2014.
Read | Raghuram Rajan: Demonetization, the GST has slowed India's economic growth, 7% not enough
On Saturday, the former RBI governor, Rajan, said the implementation of the demonetization, and then the GST, were the two major events that have dampened India's economic growth in 2017. Rajan added that the 7% growth rate was not enough to meet the country's needs. "The two successive shocks to demonetization and the GST have had a serious impact on growth in India. It is interesting to note that growth has slowed at a time when growth in the global economy has peaked, "he said.
Addressing the problem of rising non-performing assets (NPAs) and the need to strengthen banks, Mr. Jaitley said that several steps had been taken to minimize the NPAs and that they were bearing fruit . He also stressed the need to strengthen the banking system in order to preserve market liquidity.
Rajan commented on the rise in non-performing assets (NPAs), saying the best thing to do in such a situation is to "clean up". It is essential to "solve the problem", so that healthy balance sheets can get banks back on track. "India has taken a long time to clean the banks, partly because the system did not have any tools to deal with bad debts," said Rajan.
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