Indian prime minster Narendra Modi yesterday hailed the country’s recent economic progress, despite recently-released data revealing slower growth during the second quarter of 2017.
Official figures covering April to June revealed India’s economy grew by 5.7 per cent compared to the same period in 2016. That’s down from a growth rate of 6.1 per cent year-on-year in the previous quarter.
Economic analysts have suggested the dip in growth may be in part down to last November’s demonetisation programme. The move, which led to confusion and cash shortages, was designed to target black marketeers and tax evaders by banning banknotes with a face value of 500 and 1,000 rupees.
More recently, the government brought in a new tax on goods and services in July. This has rewritten the rules on the way firms pay taxes and again led to confusion – especially for small firms.
Addressing a meeting of the BRICS (Brazil, Russia, India, China and South Africa) Business Council in China yesterday, Mr Modi highlighted the latest economic reforms. He described July’s tax changes as India’s “biggest economic reform measure ever”.
Pratik Dattani, managing director of London-based economic strategy and consulting firm EPG, told IndiaGBnews.com he believes despite initial confusion, the tax changes will prove to be of great benefit to India’s economy.
He said: “The new GST regime will undoubtedly be extremely positive for the long-term health of the Indian economy, but there is some real short-term pain. Particularly smaller retailers are finding the multiple rates of GST confusing, and there have been some early technical glitches in the online filing system. But already, the government has seen significantly more sales tax revenue collected as a direct result of the change.
“There are multiple concurrent changes for the aam aadmi (common man) happening in India right now. Last week was the deadline for linking PAN and Aadhar cards, and demonetisation concluded just a few months ago, which resulted in a negative impact on growth in early 2017.”
Mr Modi told the BRICS Business Council that India was changing fast into one of the most open economies in the world today.
He said: “Foreign Direct Investment inflows are at an all-time high, rising by 40 per cent. India has moved up in the World Bank Index of Ease of Doing Business. Similarly, we have moved up 32 spots in last two years in the Global Competitiveness Index.
“The Goods and Services Tax that was introduced in July is India’s biggest economic reform measure ever. In one stroke, a unified market of 1.3 billion people has been created. Programmes like Digital India, Start Up India and Make in India are changing the economic landscape of the country. They are assisting India turn into a knowledge based, skill supported and technology driven society.”