As a part of its standard practice, the World Bank has released a report in which it has stated its revised growth projections for various countries. The report has also stated what initiatives a country should take for its better development.
So let's see how India has fared on this front.
As reported in Business Standard, the World Bank recently revised India's GDP growth estimates marginally from 5.5% in June to 5.6% recently. As per this multilateral institute, India has fair chance to register 5.6% growth in the current fiscal and 6.4% in the subsequent year. But India's growth is dependent on several developments.
So, what is World Bank's advice to Indian government?
World bank has suggested that the Indian government should take steps towards bringing structural reforms in the country. The implementation of goods and service tax(GST) can infact be an important turning point for the country's development. Over and above, a prudent macro economic management will be an important boost for the India's growth.
Among the various things, bank has laid special emphasis on implementation of GST. Supply chain delays and uncertainty have been key concerns for manufacturing growth and competitiveness in the country. Regulatory barriers to the movement of goods across state borders have put Indian manufacturing firms at a significant disadvantage with international competitors. Since the transit times increases, this impacts the overall transit cycle, thus increasing the overall costs.
As such, implementation of the GST could turbo-charge India's economic growth and help in improving competitiveness of India's manufacturing sector.
It's a known fact that GST is the most radical of all tax reforms and has been considered since 2000. However there has been huge political influence over its implementation. The state governments are worried about their taxation powers. Over and above, the tax compensation to states are delayed. This along with several other such issues has made states hesitant about embracing GST. Having said that, in the recent budget the finance minister has indicated to take aggressive steps and has kept GST as priority. While various issues needs to be ironed out, we hope, this time GST indeed sees the light of the day as planned in FY17.