Finance Minister Arun Jaitley on Sunday, 11 November, 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 of India (RBI) governor Raghuram Rajan, who on Friday blamed the Goods and Services Tax roll-out along with demonetisation 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.
Though the stated objectives of the move were to curb black money and choke the channels pumping in fake notes into the economy, the RBI in July had stated that as much as 99.3 percent of the cancelled notes had come back to the system and also cash in circulation had topped the pre-note ban days.
‘Monumental Reform’
Interestingly, the government did not celebrate the second anniversary of the controversial decision on 8 November, 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.”Arun Jaitley
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 percent in the subsequent quarters.
He was also quick to point out that these numbers are much higher compared to 5-6 percent 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.
‘GST and Demonetisation Hard Blows to the Economy’: Rajan
Delivering a lecture in the US on Friday, Rajan – whose three-year stint at the RBI ended in September 2016 two months before demonetisation and almost a year before GST implementation in July 2017 – had termed the twin moves as "hard blows" to the economy when global growth was much better.
“The two successive shocks of demonetisation and GST had serious impacts on growth, which has fallen off interestingly at a time when the global economy was picking up fast.”Raghuram Rajan
"The reality is that seven (7 percent growth) 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 (of growth)," Rajan had added.
‘Leaders Shouldn’t be Cowards, But Decisive Decision-Makers’: Jaitley
Jaitley said "reforms," including GST, demonetisation and the much-contested Aadhaar, have ensured greater formalisation of the economy and made available extra resources which are now being utilised for building infrastructure, rural roads and also for paying for various social sector schemes aimed at uplifting the masses.
“Leaders should not be cowards, they should be decisive decision-makers who should have the capacity to take these decisive decisions, bear the criticism, and eventually in the larger interest of the nation, implement them.”Arun Jaitley
Within the first year of GST implementation, Jaitley said the number of people who registered for GST has gone up by 74 percent and the government has also been able to bring down tax rates for as many as 334 commodities than previous levels.
He reiterated that the Aadhaar and the schemes working through it are alone have helped save over Rs 90,000 crore, and welcomed the Supreme Court order upholding the biometric-based identity project, though with many conditions.
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