India will continue to be the fastest growing among the G20 grouping with economic growth at over 7% annually but reforms are required to sustain the momentum, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday.
OECD forecast India’s GDP to grow 7.3% in 2017-18 and accelerate to 7.7% in 2018-19.
Presenting the latest OECD Economic Survey of India to economic affairs secretary Shaktikanta Das, OECD secretary general Angel Gurría, said maintaining the reform momentum will be critical to boosting investment and creating the quality jobs needed to ensure strong and inclusive growth for future generations.
While the Indian economy is expanding at a fast pace, boosting living standards and reducing poverty nationwide, Gurria said: “India provides a welcome counter-point to a global economy that has been under-performing for years.”
OECD said the priority areas for future action, including continuing plans to maintain macroeconomic stability and further reduce poverty, additional comprehensive tax reforms and new efforts to boost productivity and reduce disparities between India’s various regions.
The implementation of the landmark GST (Goods and Services Tax) reform will contribute to making India a more integrated market, it said. “By reducing tax cascading, it will boost competitiveness, investment and job creation. The GST reform designed to be initially revenue-neutral should be complemented by a reform of income and property taxes,” the survey said.
A comprehensive tax reform could help raise revenue to finance much-needed social and physical infrastructure, promote corporate investment, enable more effective redistribution and strengthen the ability of states and municipalities to better respond to local needs, it said.
Ranking states on the ease of doing business is opening a new era of structural reforms at the state level and will help unleash India’s growth potential, it said.
Further benchmarking among states and strengthening the sharing of best practices, particularly on labour regulations and land laws, could add to the reform momentum.