IMF thinks GST will propel India’s growth to over 8%
The Dollar Business Bureau
IMF believes that the GST reform will pay-off, and help India grow beyond 8%. A senior IMF official was quoted as saying that the Indian government’s significant progress will support strong and sustainable growth. The growth is anticipated as GST would enhance production and lead to uninterrupted movement of goods and services across the Indian territory.
The IMF pointed out that India is the fastest growing emerging economy and currently represents the strongest-growth in the world. According to current projections, India grew by 6.8% during FY2016-17, and is anticipated to grow 7.2% during FY 2017-18.
Besides GST, domestic factors such as stronger rupee, fiscal and monetary policies, focus on a digital payment structure and the growth of the stock markets must have helped the IMF make such observations. Besides these, the oil-price crash was also one strong reason for IMF to suggest the growth.
For some time India lost partial momentum on its growth-numbers due to demonetization that was implemented on November 8. Many economists were puzzled, some even downgraded the growth rate for Q1 2017-18 to 6.5-7%. However the recent observations by the IMF show that GST would completely negate the impact of demonetization.
Though optimistic about the growth, the international monetary regulator advised the Indian government to take steps to implement stronger reforms in the areas of employment, labour-markets, increase in agricultural productivity and more importantly address the issue of non-performing loans. NPAs as early as March 2017 crossed the 7 lakh crore mark, while policy-makers and the Reserve Bank of India mooted a slew of policies to bring down this number.