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IMF Chief Says Indian Economy on 'Very Solid Track'

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GANESH65

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GST, Note Ban Get Thumbs Up as IMF Chief Says Indian Economy on 'Very Solid Track'
Washington: Days after the International Monetary Fund lowered its growth forecast for the current and the next year, IMF chief Christine Lagarde on Sunday said the Indian economy is on a "very solid track" in the mid-term.

"Turning to India... we have slightly downgraded India; but we believe that India is for the medium and long-term on a growth track that is much more solid as a result of the structural reforms that have been conducted in India in the last couple of years," the IMF Managing Director said.

Describing the two major recent reforms in India — demonetisation and Goods and Services Tax (GST) — as a monumental effort, Lagarde said it is hardly surprising that there "is a little bit of a short-term slowdown" as a result.

"But for the medium term, we see a very solid track ahead for the Indian economy," she said to a question on India.

"We very much hope that the combination of fiscal, because the deficit has been reduced, inflation has been down significantly, and the structural reforms will actually deliver the jobs that the Indian population, particularly the young Indian people expect in the future," Lagarde said.

Speaking at a separate news conference, Finance Minister Arun Jaitley said India had carried out key the structural reforms at the right time when the growth rate was high and it will serve the country well in the days to come.

"When the world was growing at two-and-a-half per cent, India was the fastest-growing major economy in the world. That was a time to really fix the roof. You don't have to wait for a downward slide in order to do it," Jaitley told a group of Indian reporters at a news conference in Washington.

"I think, this was just the right time to bring about structural changes," he said.

The finance minister took a shot at his critics who claim that demonetisation has hurt the Indian economy — at least in the short-run.

"The fundamental question is: Does India continue to indefinitely be a cash-dominated economy? To say it's a very risky proposition, it will have adverse consequences for a quarter or two, so let's not attempt it? Can India say, you will have de-stocking, so lets not attempt a GST?," the finance minister asked.

Among his critics were several leaders from the opposition Congress party. Jaitley said the BJP simply did what the Congress couldn't while they were in power.

"Attacking or ending this black money was never a priority for the Congress. So their concern (about demonetisation) is natural. And GST was a Congress move. But since (the Congress) party is an opportunist party, it is opposing it," he said.

"Populism is what we did not indulge in. We could have let people live in a cash dominated economy and let India continue to have a shadow economy and have everyone really prosper on that basis. (But) we struck a blow to that kind of an economy. That's not populism. That was the right economic policy to follow," he said.

The Indian government has, however, received support from top leaders of the IMF and the World Bank who have called the slowness in recent Indian growth rate "an aberration" and a short-term one.

Jaitley said the positive responses and statements about the Indian economy by the world leaders had "increased the confidence of India".

"There is a global appreciation of the fact that India has the capacity and courage to carry out structural reforms like demonetisation and GST," he said.

http://www.news18.com/amp/news/busi...ys-indian-economy-on-very-solid-track-1546753
 
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Two days back the agency down grades India's growth rate for subsequent Two years due to Note ban and GST. And two days after its chief feels the evil effects are temporary . Quite confusing. If it was really so then why did they reduced the growth rate. What made them think that the temporary effect could drag our growth for two long years?
 
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Two days back the agency down grades India's growth rate for subsequent Two years due to Note ban and GST. And two days after its chief feels the evil effects are temporary . Quite confusing. If it was really so then why did they reduced the growth rate. What made them think that the temporary effect could drag our growth for two long years?

These hifi guys are confused and do not have a finger in the pulse..The are good at descriptive and prescriptive not predictive!!
 
Two days back the agency down grades India's growth rate for subsequent Two years due to Note ban and GST. And two days after its chief feels the evil effects are temporary . Quite confusing. If it was really so then why did they reduced the growth rate. What made them think that the temporary effect could drag our growth for two long years?

The reason for the confusion with the IMF guys is that at present, real rural labour growth has been the at the fastest ever in India This would indicate that the Government's targeted macro policies are towards the poorest of the poor and they are gaining handsomely. Many of these are not captured in the present model of IIP parameters. That is why you would find BJP gaining more and more vote share in all sundry eleections that are taking place and the people refuse to believe the doomsday scenario projected by Yashwant Sinha, Arun Shourie etc. and magnified by vested interested media like Rajdeep Sardesai or Siddharth Varadarajan.

But what is also clear is that the middle class aspirational group which is presumed to be the backbone of Sri Narendra Modi's popularity are getting disillusioned as they find their real income growth not much appreciating but they are subjected to a very high level of indirect taxes like GST, swach Bharat cess, service charges tax etc. but they do not find much improvement in Governmen's services thanks to our bloated bureaucracy which binds everything in a redtape.

To take care of these middle class the government has reduced cess and taxes on petrol, diesel and rationalization of GST etc. The elite cant digest that both real poor class and the middle class disposable incomes rising, so taunt the aspirational middle class as "new entitled class" and keep floating odd stories of dalit atrocity and beef eating violence to maintain the wedge between the ruling establishment and the masses. That they find ready support of the "unemployed" marga-darshak mandal in the form of Arun Shourie, Yashwant Sinha, Varun Gandhi etc. is given. They also invent "new opposition leaders" to Modi in the form of Kanhaiya Kumar, Hardik Patel etc.

The following piece by Surjit Bhalla in Indian Express taking the case of Ploughers and Carpenters as representative of increase in real income growth of rural poor may help.

http://indianexpress.com/article/op...ation-gst-narendra-modi-arun-jaitley-4867559/
 
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