Published: November 11, 2018 22/12/15
On Sunday, EU Finance Minister Arun Jaitley defended goods and services tax (GST) as a "monumental reform", the day after the former Governor of India Reserve (RBI) Raghuram Rajan criticized its implementation.
"You will always have critics and cynics who will come and say (GST) slowdown in India's growth," said Jaitley during a speech at the 100th anniversary of the Union Bank of India.
Defending the NDA government's decision to introduce GST in July last year, Jaitley said it was efficiently implemented, and even when the economy slowed down for two quarters, there was an increase.
Opposing criticism about the implementation of the tax reform, Jaitley said: "GST has slowed growth for two quarters, but people do not notice how growth has increased."
The finance minister said that the country's growth increased to 7%, and then to 7.7%, and in the last quarter it increased to 8.2%. He paid particular attention to the fact that it was well above the 5-6 percent increase achieved in 2012-14.
Read | Raghuram Rajan: Demonization, GST has stopped Indian growth, 7% too little
On Saturday, the former RBI Governor, Rajan, said that the implementation of demonization, followed by GST, were two important events that hampered India's economic growth in 2017. Rajan also stated that seven-step growth is not enough to meet the country's needs. "The next two shocks of demonization and GST have had a major impact on growth in India, with growth declining significantly when growth in the global economy has peaked," he said.
Referring to the issue of rising non-recoverable assets (NPAs) and the need to strengthen banks, Jaitley said several steps have been taken to minimize the NPA and bear fruit. He also stressed the need to improve the banking system's strength to maintain liquidity in the markets.
Rajan commented on the growing non-recyclable assets (NPA), saying that the best thing to do in this situation is "clean up". It is important to "deal with bad things" so that banks can be brought back to the track thanks to clean balances. "It took India a lot more time to clean up the banks, partly because the system did not have instruments to deal with bad debts," Rajan said.
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