The Organisation for Economic Cooperation and Development (OECD) had recently released Economic Survey of India 2017 report.
What are the findings of the survey?
It cut its growth projection for India in 2016-17 to 7% from the 7.4% it had projected last year.
It also has forecast a growth rate of 7.3% for 2017-18 and 7.7% for 2018-19.
This is more than double the current global growth figure, and four times the OECD average.
At the same time, inflation, the current account deficit, and the central government deficit have all been brought down in the past few years.
The report raised some issues that could alter the performance of the Indian economy, including the bank NPA issue and geopolitical risks.
The report also added that the increase in NPLs (non-performing loans) largely reflects greater recognition of them, rather than a further deterioration of underlying fundamentals.
It states that the highly-leveraged companies and public banks with large non-performing loans are exposed to major shocks emanating from domestic and foreign financial markets.
It also predicts that Investment would suffer and recapitalisation needs would increase, with a negative impact on economic growth and the fiscal deficit.
What are the measures advised in the survey?
The survey report highlighted some key measures to increase revenue and align the system to international standards.
High corporate income tax rates and a narrow base distort the allocation of resources, discourage foreign investment and make tax evasion and avoidance more attractive.
Tax disputes are frequent and long to resolve.
Staff numbers and training levels are low in the tax administration.
Therefore the OECD recommended implementing the reduction of the corporate tax rate from 30% to 25%, provide certainty regarding tax rules and their implementation, and increase the number and training of staff employed in the tax administration.
