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India Records Impressive Growth

India Records Impressive Growth India Records Impressive Growth

India's growth has been "impressive" in the recent years which makes room for tax broadening efforts by the government, according to a top IMF official.

"India has recorded quite an impressive growth performance in recent years. Our view is that the elimination of fuel subsidies and the targeting of social benefits has delivered in terms of allowing the union budget target to be achieved at 3.5% of GDP," Vitor Gasper, director of the IMF Fiscal Affairs Department told reporters at a news conference in Washington Thursday, PTI reported.

"We have been collaborating with the Indian authorities in terms of looking at fiscal structural measures, including expenditure rationalization while protecting infrastructure investment, tax broadening efforts," he said. In this context, the rollout of Goods and Services tax is an extremely important step that will create a true unified national market in India, he said.

"We see room for tax broadening efforts. We see room for more progressive income taxes in line with trends in income inequality. Perhaps more generally, we do see a case for a medium-term framework and we know that the authorities are actively working on that," Gasper said.

Gasper said globalization and technological change have been major drivers of economic growth and cross country convergence. "More than one billion people have been lifted out of extreme poverty since the early 1980s, and most of them come from China and India," he said.

India is set to leapfrog Germany to rank fourth globally by 2022, pushing the UK down to sixth place behind its European peer. The slide in Britain’s relative size comes as the nation sets out to redefine its trading relationship with the rest of the world after Brexit, IMF report said, Bloomberg reported.

Britain’s global economic power is waning as the Indian economy expands. Britain is set to drop out of the world’s five largest economies based on gross domestic product in nominal terms, according to International Monetary Fund estimates published this week.

The rankings also highlight India’s rapid rise, with the economy expanding 9.9% per year. By contrast, the IMF projects the UK will grow just 2% this year and 1.8% in 2018, impeded in part by “the negative effects of the United Kingdom’s decision to leave the European Union.”

 

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