MUMBAI: Finance Minister Arun Jaitley has hit out at the “critics and cynics” who blame GST for growth deceleration, saying the indirect tax reform had only a “transient” impact on growth and that too for two quarters.
In remarks apparently aimed at former Reserve Bank governor Raghuram Rajan, who blamed the Goods and Services Tax roll-out along with demonetization for lower GDP growth, Jaitley said the economy recovered fast from the limited “disruptionist impact” of the tax reform.
But the minister was silent on Rajan’s criticism of the note-ban, which has disrupted everyone’s life in general and that of small traders and small businesses in particular.
Though the stated objectives of the move was to curb blackmoney and choke the channels pumping in fake notes into the economy, the RBI in July had stated that as much as 99.3 per cent of the cancelled notes had come back to the system and also cash in circulation had topped the pre-note-ban days.
Interestingly, the government did not celebrate the second anniversary of the controversial decision on November 8, unlike the first anniversary when it had listed out the benefits of the move as increased tax payers’ base and higher digital transactions.
Claiming that GST had a smooth implementation, Jaitley, without naming anyone, said, “You will always have critics and cynics who will come up and say it slowed down growth.”
Jaitley, who was addressing the centenary celebrations of the state-run Union Bank of India through a video message, described GST as a “monumental reform” that impacted growth for just two quarters, as GDP numbers since then climbed up to 7, 7.7 and 8.2 per cent in the subsequent quarters.
He was also quick to point out that these numbers are much higher compared to 5-6 per cent achieved between 2012 and 2014 under the previous government.
The minister said ever since the Narendra Modi government assumed office, the country has been able to retain its position as the fastest growing major economy.PTI
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