GST is a 'monumental reform', hit growth for only 2 quarters: Jaitley

File photo of Union Finance Minister Arun Jaitley. Photograph:( ANI )

WION Web Team Delhi, India Nov 11, 2018, 09.36 PM (IST)

Union Finance Minister Arun Jaitley on Sunday stated that the banking system needs further strengthening, news agency PTI reported. 

Jaitley further added that although GST slowed down growth rate for two quarters, it rose after that. 

Critics and cynics say GST slowed down economic growth, but it was a smoothly-implemented, monumental reform, the minister stated.

He also said that NPAs need to be minimised and steps taken in that regard are bearing fruits.  

Jaitley's remarks follow former RBI Governor Raghuram Rajan comments wherein he blamed the indirect taxation reform for derailing India's growth story.

"You will always have critics and cynics who will come up and say it (GST) slowed down India's growth," Jaitley said, speaking at state-run Union Bank of India's 100th-anniversary celebrations event in Mumbai.

Jaitley said that the growth increased to 7 per cent, then to 7.7 per cent and went up till 8.2 per cent last quarter and specifically pointed out that this is much higher than the 5-6 per cent expansion achieved between 2012-14.

The Goods and Services Tax (GST), India's biggest tax reform since independence which came into force on July 1, 2017, had "disruptionist" impact on economic growth only for two quarters, he said.

Former RBI Governor Raghuram Rajan on Saturday launched an attack on the Central government, calling demonetisation and the Goods and Services Tax (GST) as the two major headwinds that held back India's economic growth last year.

Rajan added that the current 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 delivering the second Bhattacharya Lectureship on the Future of India.

"The reality is that seven is not enough for the kind of people coming into the labour market and we need jobs for them, So, we need more and cannot be satisfied at this level," he said. 

"What happened in 2017 is that even as the world picked up, India went down. That reflects the fact that these blows (demonetisation and GST) have really really been hard blows...Because of these headwinds we have been held back," news agency PTI quoted Rajan. 

(With inputs from PTI