IMF supports govt’s move to cut corporate taxes, says ‘will have positive impact on investment’
Washington DC (USA) | Jagran News Desk: India’s decision to reduce corporate income tax has been supported by the International Monetary Fund (IMF) which has said that the decision will have a positive impact on investments.
The global agency, however, said that the country needs to address the continued fiscal consolidation and secure long-term stability of the fiscal conditions.
“We believe India still has limited fiscal space so they have to be careful. We support their corporate income tax cut because it has a positive impact on investment,” said IMF Director for Asia and Pacific Department, Changyong Rhee on Friday.
Rhee further said that despite a slowdown in the last two quarters in India, the country’s economy is expected to grow at 6.1 per cent this fiscal year, picking up to 7.0 per cent in 2020.
“The monetary policy stimulus and the announced corporate income tax cut are expected to help revive investment,” he said.
Meanwhile, the Deputy Director of IMF’s Asia and Pacific Department, Anne-Marie Gulde-Wolf said that India needs to address the non-bank financial sector issues.
“While there have been improvements that have been put in motion, including efforts to recapitalise the state banks, the issue of non-bank financial institution remains partly unresolved and regulatory equity is one of the issues that needs to be achieved,” Anne said.
“We also had a FSAP. So there are issues working at that and this is something that is why not yet fully achieved, but is entrained. While there are problems at this stage, increased attention to lending practices of non-bank financial institutions continue to be very important,” she added.
Speaking about India’s overall debt, Anne said that the country has a fairly high level of debt and fiscal consolidation needs to be a priority.
“However, implementing fiscal consolidation in the context of a federal system is much more complicated. The level of fiscal structural issues and challenges are different in different states,” she said.
Talking about the surveillance engagement with India, Anne said that the IMF is increasingly placing emphasis on the need to better coordinate the fiscal state-level activities and fiscal activities.
“But it is a concern that the authorities are taking serious and are working at,” she said.
(With PTI inputs)
Posted By: Aalok Sensharma