GST to boost India’s economic growth: IMF

The Dollar Business Bureau

Underlining the Goods and Services Tax (GST) as a 'crucial step', the International Monetary Fund (IMF) on Thursday said the new tax framework will boost India's tax buoyancy and economic growth.

"India has recently taken important steps towards a national goods and services tax which, when fully implemented, promises to boost tax buoyancy and growth, by enhancing the efficiency of the internal goods and services market," IMF said.  

In a note based on 'Global Prospects and Policy Challenges', released ahead of the upcoming G20 Summit in China, the global monetary institution noted that the country’s high-frequency data indicated a continuous strong growth, supported by private consumption.

The Indian government is planning to roll out the new tax regime from April 1st next year.

Striking a similar note on the government’s decision to establish a six-member Monetary Policy Committee (MPC) to contemplate on the interest rate, IMF said, "the recent formal adoption of a symmetrical inflation target by India should provide a robust institutional foundation for maintaining price stability."

"Where inflation targeting frameworks are already established, improving the transparency of instruments and policy objectives can provide further assurance that contractionary shocks will be absorbed," it added.

As part of the government’s new framework, it has set an inflation target of 4%, which the MPC are required to keep in mind while fixing the interest rate.