Staff Reporter / New Delhi
Union Finance Minister Arun Jaitley on Sunday rejected former Reserve Bank of India (RBI) governor Raghuram Rajan criticism over the Goods and Services Tax (GST). Jaitely termed GST as a “monumental reform”.
“You will always have critics and cynics who will come up and say it (GST) slowed down India’s growth,” Jaitley said while addressing the Union Bank of India’s 100th-anniversary celebrations.
Defending the government’s decision to roll out GST in July last year, Jaitley said that it was a smoothly-implemented and even as it slowed down the economy for two quarters, the country witnessed a rise in growth after that.
Countering criticism over the implementation of the tax reform, Jaitley said, “GST slowed down growth for two quarters, but people overlook how growth rose after that.”
The finance minister said that the country’s growth increased to 7 per cent, then to 7.7 per cent and went up till 8.2 per cent last quarter. He specifically pointed out that it was much above the 5-6 per cent growth achieved between 2012-14.
He said, in the last four years, the government has infused 75 thousand crore rupees and over two lakh crore rupees in two installments towards recapitalisation of public sector banks.
He said, this was done to enable the banks to overcome the challenges they face as well as to enhance their lending capacities. Mr Jailtley said, it is only a strong banking system which will be able to improve credits in those sectors which really need credits.
On Saturday, former RBI governor Rajan said that the implementation of demonetisation and subsequently the GST were the two major events that held back India’s economic growth in 2017. Rajan further said that the 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.
Addressing the issue of rising Non-Performing Assets (NPAs) and the need to strengthen the banks, Jaitley said several steps have been taken in order to minimise the NPAs and they are bearing fruit. He also stressed upon the need to improve the strength of the banking system so that liquidity in markets is maintained.