Corporate income tax cut will help revive investment in India: IMF

Washington, October 19

The International Monetary Fund on Friday supported India’s recent decision to reduce corporate income tax, saying it had a positive impact on investment.

It, however, said India should address 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,” Changyong Rhee, Director, Asia and Pacific Department, IMF, told reporters at a news conference here.

Following a marked slowdown in the last two quarters in India, the economy is expected to grow at 6.1 per cent this fiscal year, picking up to 7.0 per cent in 2020, he said.

“The monetary policy stimulus and the announced corporate income tax cut are expected to help revive investment,” said the top IMF official.

Anne-Marie Gulde-Wolf, Deputy Director, Asia and Pacific Department, IMF, said India should 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,” she said.

The government is aware of it, she added. PTI