International Monetary Fund (IMF), an international organization headquartered in Washington, D.C., in the United States, gave thumbs up to the passage of the long-pending Goods and Services Tax (GST) by the Lower House of Indian parliament, saying that it was one of the key elements for the long-term sustainable growth in India.
The international organization highlighted that while this piece of legislature was one of the most important agenda for Prime Minister Narendra Modi government, its implementation at state levels and co-ordination remains to be equally important and to be seen. IMF has already factored in implementation of the GST in the 2016 GDP forecast of 7.5%.
GST, originally mooted by the UPA will subsume excise, service tax, state Value Added Tax (VAT), entry tax, octroi and other state levies after its implementation from April 1, 2016, is definitely expected to add to GDP growth rate.
Separately, IMF also pointed out that one good news for Asia was that growth in India was picking up even as that of China’s growth was moderating, while Japan was recovering. However, it flagged concerns about the ability of the Indian banking and corporate sectors to support the long-term 7.5% per annum Indian GDP growth.
It highlighted that though India was pushing forward with infrastructure development and aiming for higher economic growths, with government also restructuring some of the state banks balance sheets and non-performing loans from the past years’ stalled projects. But there was a concern about the banking sector’s ability to support higher potential of the Indian economic growths.
Notably, it also stated that that international organization had high expectation from Modi government implementing reforms, like those on the lines of inflow of foreign investment, announced investments plans, reforms in many sectors and the GST.