Prime News, National (Bengaluru), July 20:- India will reclaim its position as the fastest growing major global economy this year, partly propelled by benefits from a new tax system and bolstered by an expected central bank interest rate cut, a Reuters poll showed.
Having been in the offing for close to two decades, the goods and services tax (GST), which the government touts as the biggest domestic tax reform since independence, was introduced on July 1 and has bolstered economists’ outlook.
The new national tax will replace multiple cascading taxes levied by the central and state governments which economists in the poll were unanimous in saying would have either a positive or very positive effect on long-term GDP growth.
The median forecast from the poll of over 35 economists showed India’s economy is expected to expand 7.3 percent in the fiscal year ending March 2018, after slowing sharply at the start of 2017 following last year’s government move to scrap high-value banknotes.
While that is a downgrade from the previous poll’s forecast of 7.5 percent, it is better than the International Monetary Fund’s projection of 7.2 percent.
It is also stronger than a similar Reuters poll of economists predicting China will grow by 6.6 percent in calendar year 2017.
“The GST is likely to add one-two percentage points to GDP growth in the medium to long term with dismantling of tax barriers and by creating a unified market, further improving the competitiveness of exporters and in general, the ease of operating in India,” said Tushar Arora, senior economist at HDFC Bank. (MR, Inputs: Agencies).