GST to push India’s growth but bad loans still a problem: IMF
The ambitious Goods and Services Tax to be implemented from July 1 would help raise India's medium-term growth to above eight per cent, the IMF has said, but expressed concern over the health of the country's banking system. Observing that India is the "fastest growing emerging market economy" in the region, Tao Zhang, Deputy Managing Director of the International Monetary Fund, said the IMF believes that India will continue to grow at a fast pace, with a projected 6.8 per cent rate for Financial Year 2016-17 and 7.2 per cent in 2017-18. "The government has made significant progress on important economic reforms that will support strong and sustainable growth going forward," Zhang told PTI in an interview.
"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," he said. Zhang said the IMF is "extremely impressed" by the work that is being done. “We expect it will pay off in terms of higher growth in the future," he said in response to a question on the reforms being undertaken by the Indian government. Lower global oil prices have boosted economic activity, and helped lower inflation. In addition, fiscal and monetary policies have helped foster economic stability, he said.
Strong India-China partnership key for global growth
A strong partnership between India and China, which are currently responsible for half of the global growth, is important for the world, the IMF has said. "Global cooperation and pursuing the right policies can help achieve strong, sustained, balanced, and inclusive growth," Tao Zhang, Deputy Managing Director of the International Monetary Fund, told PTI in an interview. "India and China are currently responsible for half of the global growth, so a strong economic partnership between these two large economies is very important – for their people and for the world," he said. Well-implemented trade agreements can contribute to economic prosperity for all concerned, the top IMF official said. "The IMF has always supported an open trade system, as trade has been an engine of growth for the global economy. The objective of open trade conducted under fair rules that are well enforced is a shared objective," he said.