The International Monetary Fund (IMF) in its report has said that the adoption of the landmark goods and services tax (GST) from July 1 will help to raise India’s medium-term gross domestic product (GDP) growth to over 8 per cent as it will create a single national market for enhancing the efficiency of the movement of goods and services across Indian states.
Talking on the reforms undertaken by the government, Tao Zhang, Deputy Managing Director of the IMF has stated that the government has made significant progress on important economic reforms that will support strong and sustainable growth in future. He also said that they are extremely impressed by the work that is being done and expects that it will pay off in terms of higher growth in the future.
Observing that India is the ‘fastest growing emerging market economy’ in a region that remains the strongest-growing in the world, Zhang has said that the country is going to continue to grow at a fast pace, with a projected 6.8 per cent rate for FY17 and 7.2 per cent in FY18. He further said that the currency exchange initiative led to a slowdown in economic activity. However, he clarified that there are initial signs of recovery as the currency exchange has been progressing well.
Highlighting some key factors, the deputy managing director has said that lower global oil prices have enhanced economic activity and helped lower inflation. In addition, he said that fiscal and monetary policies have also helped foster economic stability. He noted that labour market reforms should take priority as India persists with its strong reform efforts. He also observed that these would facilitate greater and better quality jobs, raise female labour force participation and enhance the impact of recent product market reforms.