GST will be very good for Indian growth: World Bank Chief Jim Yong Kim
Washington D.C, October 13: The results of the reforms undertaken by the Prime Minister Narendra Modi will have a significant result and it will be reflected in the mid and long-term growth figures said the World Bank chief, Jim Yong Kim.
Addressing the World Bank-IMF annual meetings in Washington, Kim said that the Goods and Services Tax (GST) will be the very good tool to sharpen the Indian growth and economy. He said that his team feels that the slowdown has been because of the waiting for the passage of the Goods and Services Tax. But the goods and services tax, we have to understand, is something that India has been talking for a long time, well before Prime Minister Modi took power.
He further added that the goods and services tax is going to stop things like trucks being stalled for such a long time in transporting things through India because at every border they have to stop and go through a complicated tax payment process. The goods and services tax will be very good for Indian growth, but for now, the sense is that companies are waiting until that passes before really making investments and taking action. So, our sense is that this is temporary, he said.
Talking about Prime Minister Modi’s strategy, Kim said that he took a very different approach to our Doing Business report. His approach was: we are going to move up quickly and we're going to do the things that we need to do to reform the business environment. And the actions that he's taken are really quite substantial.
He further added that we will wait to see what happens on the Doing Business report this year, but we've been very encouraged with the reforms that he has already taken. Now he knows that there is more to do. I won't be specific about them because they have prioritized them for the government, but the reform process has been significant and we think that certainly in the medium and long term, the growth will reflect the seriousness of Prime Minister Modi's government in making those reforms.
According to the report by the World Bank in India on 11th October 2017 states that the economic activity is expected to stabilize, maintaining annual GDP growth at 7.0% in FY18. Growth is projected to increase to 7.4% by FY20, underpinned by a recovery in private investments prompted by a recent increase in public capital expenditure and an improvement in the investment climate (partly due to passage of the GST and the Bankruptcy Code, and measures to attract FDI).