We have to be extremely cautious in implementing the GST: Former Finance Minister Yashwant Sinha

In an exclusive conversation with ET NOW, Former Finance Minister Yashwant Sinha spoke on various challenges that the current government is facing on the economic front. Edited excerpts:

ET Now: Are you as optimistic on the impact that this GST will have, are we rushing through to meet the deadline?
Yashwant Sinha: We had probably the NCAER saying that it will add two percentage points to the GDP growth, there was no proof forthcoming. Now US Fed has said it will add over 4% growth to the GDP. Now what is most likely going to happen is that transactions which are not captured will perhaps get into it and perhaps the GDP will go up but it will add to the real growth, it will only reflect what is happening at the moment and that is where we have to be careful.

ET Now: Are we rushing through to meet the deadline?
Yashwant Sinha: To me it appears that some suggestions which were made by some state finance ministers that 1st September will be a more appropriate date is perhaps more in order because the State Assemblies are still passing the GST and I would say that let every State Assembly pass the GST bills and then implement the GST so that everybody is on board.

ET Now: You believe we risk being distracted by what will come out as an impact of the GST implementation whereas it may not really be?
Yashwant Sinha: We have to be extremely cautious in implementing the GST.

ET Now: Would you blame these non-initiatives for?
Yashwant Sinha: No, because the cogitation, the discussions in the government are perhaps taking longer than they should be allowed to take.

ET Now: Do you believe the prime minister or his office then needs to take a more active role into this?

Yashwant Sinha: No, I believe the finance ministry needs to put its head together and the finance minister needs to get personally involved in resolving the NPA issue. It reflects poorly on the finance ministry that no new initiative has been taken to resolve the NPA issue in the last 36 months.

ET Now: And you think is that.
Yashwant Sinha: The fundamentals could not support it.

ET Now: Which are the fundamentals that you are referring to, what are you referring to? Are you referring to credit growth, are you referring to gross capital formation, NPAs?
Yashwant Sinha: Yes I am referring to credit growth. I am referring to fresh investment. I am referring to new schemes, large schemes like the ones we started when we were in government and I am referring to the bank NPAs. I am referring to lack of investment leading to lack of creation of employment opportunities and things of that kind.

So as far as the fundamental problems of the economy are concerned, they remain where they were three years ago and the economy will not really move forward. We really not have a healthy growth rate until these issues are resolved.

ET Now: Are we at all on course to resolve these issues because NPA is the big elephant in the room and I think at one level the focus is all on whether Vijay Mallya will be nabbed and will be brought back to India but he does not constitute the top 20 defaulters to begin with?

Yashwant Sinha: No even if he does, that is just one defaulter. This needs, this calls for a holistic approach and no jerky or quick fix solution is going to work. We have already lost 36 months. We can hardly afford to lose another month€ before we take those initiatives to tackle the NPA problem and nothing is going to happen in the economy if the bank NPA problem is not going to tackle. But where are the initiatives.