IMF suggests 3-step formula for India to sustain high growth
29 June 2018
The International Monetary Fund today said India should carry out banking sector reforms; continue with fiscal consolidation, simplify and streamline GST; and renew its impetus on reforms, to sustain the high growth rate it has achieved.
In the fourth quarter of Financial Year FY 2017-18 India’s growth accelerated to 7.7 per cent, up from 7 per cent in the previous quarter.
IMF Communications Director Gerry Rice told reporters at his fortnightly news conference, “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 per cent in FY 19-20, respectively,” .
Rice suggested three steps for India to follow to sustain the high growth it has achieved. “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 government of public sector banks,” he said.
“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,” he added. He then suggested India to renew impetus to reforms of key markets over the medium-term.
“And thirdly, 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,” Rice said in response to a question.
The IMF Board is scheduled to meet on 18 July for its annual India meeting. “We will be releasing the staff report in relation to that Board meeting and it will have detail (about GST),” he said when asked about simplifying and streamlining the goods and services tax structure. “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,” Rice said. The IMF is scheduled to release on July 16 the update on World Economic Outlook.