Rejecting claims that goods and services tax (GST) and demonetisation of old Rs 1000 and Rs 500 notes have permanently slowed down the Indian economy, the International Monetary Fund (IMF) has said that these are just “short-term pain”.In an interview to CNBC-TV18, an IMF official said that demonetisation and GST has brought “short-term pain but long-term benefits”. He said that IMF expects India’s growth to be 6.7 percent this year and 7.4% next year.
The Goods and Services Tax (GST) was implemented in India from July 1 this year. It brings the economy under a uniform tax regimeThe Indian government scrapped Rs 500 and Rs 1,000 currency notes on November 8 last year, claiming that the move would eradicate black money, fake currency and corruption.Speaking about India’s growth rate vis-a-vis the rest of the world, he said, “India not growing as fast as the rest of world is an aberration.”India’s economic growth pace picked up to 6.3 percent in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a Goods and Services Tax (GST).
The IMF is slated to come out with an update of its projections of India’s growth rate along with the rest of the world in January.Meanwhile, in its Financial System Stability Assessment (FSSA) of India report, released yesterday, IMF said that India’s financial sector is facing considerable challenges with high non-performing assets and slow deleveraging and repair of corporate balance sheets testing the resilience of the banking system and holding back growth.Recently, the US-based Moody’s upgraded India’s sovereign rating after a gap of 13 years to Baa2, with ‘stable’ outlook, from Baa3 earlier, citing improved growth prospects driven by economic and institutional reforms.This was followed by S&P Global Rating, which kept India’s sovereign rating unchanged at BBB- with stable outlook saying vulnerabilities stemming from low per capita income and high government debt balances strong GDP growth.