2017 OECD Economic Surveys: India 2017

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India is the fastest-growing G20 economy, thanks to ambitious structural reforms and low commodity prices. Deregulation and improvement in the ease of doing business have boosted foreign investment. However, investment is still held back by the relatively high corporate income tax rates, slow land acquisition processes, stringent regulations, weak corporate balance sheets, high non-performing loans and infrastructure bottlenecks. Quality job creation has been low, due to complex labour laws. A comprehensive tax reform would promote inclusive growth: implementation of the Goods and Services Tax would support competitiveness, investment and economic growth as will reducing the corporate income tax rate and broadening the base. Property and personal income taxes could be reformed to raise more revenue, promote social justice and empower sub-national governments. Ensuring clarity and certainty in tax legislation and employing more skilled tax officers would strengthen the tax administration. Spatial disparities in living standards are large. India is reforming relations across levels of government to empower the states and make policies more responsive to local conditions. Some states have taken the lead in improving the ease of doing business and now enjoy higher productivity and income. In rural areas, poverty rates are high and access to core public services is often poor. Farm productivity is low owing to small and fragmented land holdings, poor input management, and inefficient market conditions. In urban areas, agglomeration benefits are quickly reduced by congestion costs, in particular air pollution and long commuting time.


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Basic statistics of India, 2015 or latest year available

(Numbers in parentheses refer to the OECD average)

This Survey was prepared in the Economics Department by Isabelle Joumard, under the supervision of Piritta Sorsa. Statistical research assistance was provided by Hermes Morgavi with general administrative assistance provided by Anthony Bolton and Brigitte Beyeler. The Survey also benefitted from contributions at different stages by Hugo Bourrousse, Jean-Marc Fournier; Daniela Glocker, Peter Hoeller, Paul O'Brien, Urban Sila and Alastair Thomas. The Survey was discussed at a meeting of the Economic and Development Review Committee on 19 December 2016 and is published on the responsibility of the Secretary General of the OECD.


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