NEW DELHI: India needs to undertake more reforms to continue on the path of economic growth and ensure that sufficient jobs are created in the country. Deputy Managing Director of the IMF, Ms. Gita Gopinath said on Saturday.
In her speech on the ground, Ms Gopinath further said that India must reduce its import duties if it is to be a major player in the global supply chains.
“The government has made significant improvements over the years through structural reforms.” Gopinath noted that trade integration was being questioned globally, but said it was important that India remained open to global trade.
“Tariff rates in India are higher than in comparable economies. If the country wants to be a major player on the world stage and an important part of global supply chains, it must reduce these tariffs,” said the renowned economist.
Ms Gopinath said that attaining the status of a developed country was a tremendous goal, but it would not happen automatically and achieving this goal would require continuous, consistent and large-scale efforts in many areas.
“India has seen good growth in terms of its overall growth rate and is the fastest growing major economy in the world at 7 percent.
“The question is how to sustain and further increase this momentum to increase per capita income in India and make it a highly developed economy.” she said.
Responding to a question on taxation, she said that there are parallels between India and other developing countries: most of the tax revenue in these countries comes from indirect taxes rather than direct taxes and not in the form of income taxes.
“We have also advised other developing countries to broaden the income tax base so that more income can come from these countries,” she said.
Referring to the Modi government’s cut in corporate tax, Ms Gopinath said that while it had been helpful, the issue was less about the tax rate and more about ensuring that there were no loopholes and there were not many leakages in tax exemptions.
“It is very important that your tax system has sufficient progressivity… ensuring that you (India) get enough out of your capital gains tax and your capital income tax is going to be critical,” she said.
Ms Gopinath also pointed out that there is now better technology to implement property tax and this is another area where work is needed.
