IMF says corporate tax cut has a positive impact on investment in India

The International Monetary Fund (IMF) on Friday supported India's decision to cut corporate income tax, saying that it has a positive impact on investment.

It, however, advised India to address the 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 media persons during a press conference in Washington.

He also added that the Indian economy is expected to grow at 6.1 percent this fiscal year, reaching up to 7.0 percent in 2020.

Anne-Marie Gulde-Wolf, Deputy Director, Asia and Pacific Department, IMF, said India should deal with 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, adding that the government is aware of it.

Meanwhile, Union Finance Minister Nirmala Sitharaman, who is in Washington to attend the annual meeting of the IMF and the World Bank, said that the country's economy is still growing at the fastest.

"The IMF (in its latest projections) reduces the growth (rate) for all the global economies. It reduces the growth for India too. But even with that, India is still growing as the fastest growing economy," she told the reporters.