IMF suggest India: Streamline, simplify GST for good growth rate

International Monetary Fund (IMF) on Friday suggested India to carry out reforms in the banking sector in order to sustain the high growth rate that the country has achieved. Along with that the IMF also suggested that the current government should continue with fiscal consolidation and renew impetus on reforms, adding, simplification and streamline of GST.

According to the financial sector experts, the growth rate of the country accelerated to 7.7 percent in the fourth quarter of Financial Year (FY) 2017-18, which was 7 per cent in the previous quarter.

Speaking with the reporters at his fortnightly news conference, IMF Communications Director Gerry Rice said, “We expect the recovery to continue in FY 2018-19. Growth is projected at 7.4 per cent in FY 2018-19 and actually 7.8 percent in FY 19-20, respectively.” He also suggested three steps for the growth of India.

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Stating the three points, Rice said, “One, to revive a bank credit and enhance the efficiency of credit provision; by accelerating the cleanup of bank and corporate balance sheets and enhancing the governence of public sector banks. Point two, to continue fiscal consolidation and to lower elevated public debt levels supported by simplifying and streamlining the goods and services tax (GST) structure.”

Adding the third point he said, “Over the medium-term, renew impetus to reforms of key markets, for example, labour and land, as well as improving the overall business climate would be crucial to improving competitiveness and again, maintaining that very high level of growth in India.”

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When asked about how the structure of GST can be simplified and streamlined, Rice replied, “We will be releasing the staff report in relation to that Board meeting and it will have detail (about GST).” Rice is of the opinion that GST is a complicated tax to administer. He said, “It (GST) is a complicated tax to administer and to implement, so I think some suggestions that streamlining can be important. There will be more on that in the context of the Article IV.”

As per the information, IMF Board is tentatively scheduled to meet for its annual India meeting on July 18 and scheduled to release update on World Economic Outlook on July 16.

Photo Courtesy: Ekathimerini