Apr 28, 2017 | 13:41 IST | SOURCE : Times Now, Agencies
Washington: As the nation nears the start of a new tax regime from July 1 under the historic Goods and Services Tax (GST), the International Monetary Fund (IMF) has backed the reforms, adding that it would help raise India’s mid-term growth to about 8 per cent.
Tao Zhang, Deputy Managing Director of the IMF, said the Indian government has succeeded in making significant progress in implementing economic reforms, which will support strong and sustainable growth in future.
Zhang also praised GST, explaining that it will enhance production and the movement of goods and services across the state.
"We expect that the goods and services tax (GST), which is targeted to be applied starting in July, will help raise India's medium-term growth to above 8 per cent, as it will enhance production and the movement of goods and services across Indian states," the IMF official said.
The deputy director also said that the IMF is “extremely impressed” with the work that is being done by the government of India, adding that GST will help enhance India’s growth unequivocally.
Zhang also believes that India will not slip down in terms of fast-paced economic growth, and with the implementation of GST from July, India will be looking to further improve its growth rate, which was scaled down after the demonetisation move last year, but the situation has improved considerably since November 8.
Adding to his comments on GST, Zhang also highlighted some key factors such as dip in global oil prices that have helped bolster economic activity, apart from lowering inflation.
"The currency exchange initiative led to a slowdown in economic activity. However, there are initial signs of recovery as the currency exchange has been progressing well," said Zhang, who assumed the role of Deputy Managing Director at the IMF on August 22, 2016.
"As India persists with its strong reform efforts, labour market reforms should take priority," he noted.
These would facilitate greater and better quality jobs, raise female labour force participation, and enhance the impact of recent product market reforms, he observed.
"While there has been important progress generally, we see scope to pursue better targeting and greater efficiency of subsidy and social spending programs through greater use of the trio of Aadhaar unique beneficiary identification, direct benefit transfers, and information technology," Zhao said.
"Finally, more could be done to raise agricultural productivity and enhance market efficiency. This would help increase the supply of high-value foods, enhance returns to farmers, and dampen food inflation pressures," said the IMF official responding to a question.
