IMF Shares Tips For India to Support its 7 Plus Per Cent Growth Rate
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As India is all set to celebrate its first anniversary of goods and services tax (GST) tax on 1st July, the International Monetary Fund (IMF) said the country needs to simplify its the tax structure to support its 7+ per cent growth rate.
Last year in April-July, in the World Economic Outlook report, the IMF has predicted that India would grow at 7.2 per cent in FY 2017-18. However owing to the long-lasting impact of demonetization and thereafter the implementation of the GST and its aftermath, the international body downgraded India’s growth rate to 6.7 per cent in October.
In May 2018, following temporary disruptions related to the currency exchange initiative (demonetization) and the rollout of GST, IMF said India’s growth is expected to rebound to 7.4 per cent in FY 2018-19 and 7.8 per cent in FY 2019-20, making India once again one of Asia’s fastest-growing economies.
“The recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Medium-term growth prospects remain positive, benefiting from key structural reforms, including the landmark national GST reform,” the body said it’s Regional Economic Outlook’s Asia Pacific report.
Indian publication Business Today reported that in the emerging market and middle-income economies category, India has the second highest debt, after Brazil. However, the percentage is decreasing, from 68.9 per cent this year to 61.4 per cent by 2023 which means the country on the right track provided there are no more economic disruptions and the government delivers
Meanwhile, during IMF’s fortnightly news conference in Washington, United States, Gerry Rice, Communications Director, IMF shared three tips for India to maintain its 7 plus growth story.
Tip 1 – Credit Efficiency
Rice’s first advice to India was to revive a bank credit and enhance the efficiency of credit provision.
According to Rice, this can be done - “By accelerating the cleanup of banks and corporate balance sheets and enhancing the governance of public sector banks.”
Tip 2 – Fiscal Consolidation
Rice’s second suggestion to the Indian government was to continue fiscal consolidation and to lower elevated public debt levels supported by simplifying while streamlining the goods and services tax structure.
Tip 3 – Ease of Doing Business
IMF last advice to Indian was over the medium-term to renew impetus to reforms the key markets.
“For example, labour and land, as well as improving the overall business climate. We believe would be crucial to improving competitiveness and again, maintaining very high level of growth in India,” Rice suggested.