IMF’s Gita Gopinath on Saturday said that structural reforms are required to help the Indian economy grow ahead. The Deputy Managing Director of the International Monetary Fund stated that India needs to focus on maintaining consistency in reforms and making the Goods and Services Tax (GST) regime smoother to help increase revenues for the economy.
Gopinath urged the country to rationalise the GST process going forward. Speaking at the Diamond Jubilee Conference of the Delhi School of Economics, the executive noted, “An additional about 1 percentage points of GDP can be raised from further rationalisation and simplification of GST rates.”
The official said that India is currently in a developing stage and is not going to see any decline in spending. Therefore, she urged that the country needs to focus on developing a fiscal space which should come via raising revenues to the GDP.
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Notably, India collected 6.86 per cent of the GDP from GST collections in the 2023-24 fiscal year (FY24), while the collection touched 6.72 per cent in the preceding 2022-23 fiscal year (FY23).
Gopinath added that the domestic tax system in the country needs to be progressive. She said that there is a need to raise more from property tax revenues. “Making sure that you are getting enough from capital gains is going to be important,” she noted.
She urged that the economy needs to prioritise skilling, infrastructure, and making the justice system more efficient. “Further savings can be made by targeting fertiliser subsidies. Karnataka is running a pilot, tailoring the subsidies to the size of farms,” the IMF executive noted.
Gopinath stressed that India needs to pay attention to market reforms for the country to achieve the ‘developed nation’ status by 2047. In job creation also, the country needs to generate 60-148 million opportunities for the public.