New Delhi, Feb 7 (IANS): Former Union Finance Minister P. Chidambaram on Monday said that the best way to boost demands would have been to cut the indirect taxes.

"I would have cut indirect taxes. Thats the best way to boost aggregate demands. Nine out of ten economists will tell you to do that," the Congress leader said in an interview to India Today news channel.

Asked to rationalise his suggestion in terms of Goods and Service Tax(GST) which will change the tax regime of the country, Chidambaram said: "GST is not around the corner. Not coming any where before October 1."

In August last year, Goods and Services Tax (GST) bill, a proposed system of indirect taxation, was passed which will merge most of the existing taxes into single system of taxation.

"He was dismissive of it. He has not cut any indirect taxes that I think is a terrible mistake," Chidambaram said while referring to Finance Minister Arun Jaitley's decision to not cut indirect taxes in the Union budget.

Explaining further, he said, "The budget was presented on February 1. Indirect tax cut would come to force immediately. He had eight full months to cut indirect taxes and see the effect of that on the economy."

Talking on the benefits of the reduction in the indirect taxes in the union budget, he added: "It would have boosted sales. It would have allowed or encouraged people to make new investments."

"There is so much slack in existing capacity, why would any one invest in creating new capacity?" he said.