NEW DELHI: The Goods and Services Tax (GST) bill were recently passed in both Rajya Sabha and Lok Sabha. The International Monetary Fund (IMF) on August 2 described that the passing of the Goods and Services Tax (GST) bill would improve India’s growth to a large extent. Moreover, the monetary agency termed the GST bill as an “important step”. This refers to because the bill would not only boost India’s tax buoyancy and growth but also ensure transparency.
Commenting on the prospects of the bill, the IMF added that India had taken a bold step towards the implementation of a national goods and services tax. The international fund body revealed that the new bill promises to boost tax buoyancy and growth. It also enhances the efficiency of the internal goods and services market. The IMF disclosed this information in a note on “Global Prospects and Policy Challenges” released ahead of the G20 Summit in China.
India pushing ahead for a healthy growth
Likely to be rolled from April 1, 2017, the IMF noted that the increase in the frequency data in India signals the fact of continuing high growth. It also said that Indian market would be flooded with private consumption once implemented.
Symmetrical inflation target beneficial for India
Recently, the government had set up a six-member Monetary Policy Committee (MPC) to decide interest rates. However, the recent adoption of a symmetrical inflation target will be beneficial for India. This refers to because it would provide a powerful and robust institutional foundation, which helps in maintaining the stability of the pricing structure.
GST bill ensures transparency
The note released by IMF added that the GST bill would improve the transparency of instruments. Moreover, the policy objectives can provide increased assurance about the fact that contractionary shocks will be absorbed instantly. However, this will occur only when inflation targets established frameworks.
According to the new framework, the government has fixed an inflation target of 4 percent. However, you have to take into account the variable factors, and it accounts plus or minus 2 percent. The MPC should keep this factor in mind while deciding the overall interest rate.