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GST Improved Business And Economic Climate In India, Says IMF

JAVED SAIFI | 0
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| August 8 , 2018 , 11:38 IST

The International Monetary Fund (IMF) on Wednesday attributed the Indian economic growth to the implementation of recent policies, such as Goods and Service Tax (GST).

IMF said, "GST has improved the business and economic climate in India."

In a press release, IMF has said, “India’s economy is picking up and growth prospects look bright, partly thanks to the implementation of recent policies, such as the nationwide goods and services tax.”

“As one of the world’s fastest-growing economies accounting for about 15 percent of global growth, India’s economy has helped to lift millions out of poverty,” it added.

IMF has also suggested that India will need to build on the success of its reforms to sustain this rapid growth and to raise the income of 1.3 billion people in the country.

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Ranil Salgado, the head of the IMF team for India said, “To sustain and build on these policies and to harness the demographic dividend associated with a growing working-age population (which constitutes about two-thirds of the total population).”

“India needs to reinvigorate reform efforts to keep the growth and jobs engine running. This is critical in a country where per capita income is about $2,000 U.S. dollars, still well below that of other large emerging economies,” he added.

Regarding how GST has been helping Indian economy, Salgado said, “The goods and services tax created a unified national market for the first time by lowering internal barriers to trade, effectively establishing a free trade agreement for a market of over 1.3 billion people.”

“The tax is also expected to increase the amount of economic activity taking place in the formal sector of the economy, leading to better quality and more reliable jobs,” he added.

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According to the IMF report, Indian banks are still dealing with a large number of bad loans as some companies have taken on too much debt which has weakened investment and may hurt India’s future growth.

IMF has suggested recapitalizing public sector banks and improving the independence of their boards to strengthen the financial system in the country.

“India needs to reinvigorate reform efforts to keep the growth and jobs engine running. This is critical in a country where per capita income is about $2,000 U.S. dollars, still well below that of other large emerging economies,” Salgado said.