GST Implementation Will Have Positive Impact

World Bank says India’s economic fundamentals remain strong; adds that demonetization has potential to bring positive transformation.

India remains the fastest growing economy in the world - economic fundamentals are strong, and reform momentum continues. GST is on track for implementation in the second quarter of the fiscal year, and is expected to yield substantial growth dividends from higher efficiencies, and raise more revenues in the long term, according to a new World Bank report released recently.

While, agriculture growth delivered in 2016-17, the report notes that investment growth remains subdued, partly because of banking sector stress.

The report also highlights the low and falling participation of women in the labour market. For India to achieve higher growth, it needs to create safe, flexible and well-paying jobs for a large number of women who are currently not in the labour market.

The report says the fundamentals of the Indian economy remain strong, with robust economic growth, strong fiscal consolidation, low current account deficit, higher agricultural output, growing FDI, low inflation and higher wages in rural areas.

Favourable monsoons boosted agriculture and rural consumption, while urban consumption remained robust and exports rebounded in the third quarter of 2016-17.

Timely and smooth implementation of landmark reforms such as the GST and a new code to deal with bankruptcies, as well as decisive action to resolve the NPA challenge of public sector banks, is crucial to enhance the economy’s potential growth, says the May 2017 edition of the Indian Development Update.