Critics will exist: Jaitley on note ban, GST impact
MUMBAI: Finance Minister Arun Jaitley on Sunday appeared to address former Reserve Bank of India governor Raghuram Rajan’s recent comment that the Indian economy was slowing down by saying that India has made some “monumental economic changes” over the last four years and that “you will always have critics who will come up and say it has slowed down India’s growth”. Jaitley, who did not mention Rajan in his address, admitted that steps such as demonetisation and the Goods and Services Tax (GST) slowed down growth for two quarters but described that as a “response to any monumental reform”.
“For two quarters, growth got impacted, and after two quarters, we again resumed 7%, 7.7% and 8.2% growth respectively,” Jaitely said, comparing it with 5%+ and 6%+ which existed between 2012 and 2014.
Jaitley said that India for the fifth year is the fastest-growing major economy in the world. “In a phase where we are passing through high oil prices, where India naturally gets impacted as a net buyer of oil; the strengthening of the dollar impacting almost every other currency in the world; and in a phase where there is periodic slowdown in the world; to retain a pivotal position as the fastest-growing economy is in fact an achievement,” the finance minister said through video conference at an event to celebrate 100 years of the Union Bank of India.
Rajan said last Friday that the
› For two qtrs, growth got impacted, and after two qtrs, we again resumed 7%, 7.7% and 8.2% growth respectively ARUN JAITLEY, finance minister
November 2016 move to ban high-value currency notes and the rollout of GST the following year dealt “really, really hard blows” to India’s economy at a time when global growth was “peaking up”.
Rajan demitted office on September 3 in 2016, about two months before the government’s currency ban announcement.
Jaitley contended that between 2008 and 2014, there was an attempt to artificially bring up growth by excess lending into projects that were not capable of delivering results.
“I have repeatedly said, during 2008 to 2014, indiscriminate lending took place. Particularly post-2008, after the Lehman crisis, globe growth slowed down. Growth in India also indicated to be slowed down. In that system, one of the principal challenges we have ahead of us was how to restore the health of the public sector banks and how to increase their lending ability.”