“A walk down memory lane: Hanging out at the JP tea stall at my alma mater Delhi School of Economics @UnivofDelhi. Spent many hours at the tea stall back in the day. Thank you Prof. Ram Singh (Director of DSE) for inviting me back!” Gopinath captioned her post.
Engagement at the Anniversary Event
Gopinath’s visit included participation in DSE’s anniversary celebrations, where she engaged with students and had a discussion with NK Singh, Chairman of the 15th Finance Commission of India. She also met Finance Minister Nirmala Sitharaman and congratulated her on the government’s fiscal consolidation path.
Economic Insights and Recommendations
During her stay, Gopinath shared her perspectives on India’s economic landscape in an interview with NDTV. She highlighted that while India is the fastest-growing major economy with an average growth rate of 6.6% over the past decade, job creation has not matched the growth in capital. “India has done extremely well in headline growth numbers… It is the fastest-growing major economy in the world,” Gopinath stated. She advocated for a multi-faceted approach to job creation rather than focusing on specific sectors.
Gopinath also addressed the need for structural reforms to sustain economic growth. She suggested that India should lower import tariffs to enhance its role in global supply chains and work towards a broader personal income tax base to improve revenue collection. “The significant improvements have been made by the government over the years in terms of structural reforms,” she noted.
Further, Gopinath emphasized that reducing tariff rates is crucial for India to integrate better into the global market. “Tariff rates in India are higher than in its other peer economies. If it wants to be an important player on the world stage and an important part of global supply chains, it is going to require reducing those tariffs,” she explained.
Fiscal and Taxation Insights
Gopinath highlighted the importance of enhancing revenue through broadening the tax base. She suggested that simplifying GST rates and expanding its base could potentially raise about one percentage point of GDP in additional revenue. Regarding direct versus indirect taxes, she noted, “Most of the tax revenue that is collected is indirect taxes and not direct taxes, not in the form of income taxes.”
She also commented on the need for better implementation of property tax and ensuring progressivity in the tax system. “It is very important to have sufficient progressivity in your tax system… making sure that you are getting enough from your capital gains tax from your capital income tax is going to be critical,” she advised.
Call for Broader Reforms
In addition to tax and tariff reforms, Gopinath emphasized the necessity for labor reforms, particularly those passed by Parliament in 2019, which balance labor market flexibility with worker protections. She also called for increased investment in health to ensure equal opportunities for all.
IMF Reforms and Future Outlook
Gopinath addressed the evolving role of the IMF, noting the need for reforms to reflect the current global landscape. “The world in 2024 is very different from the world in 1944 when IMF was created,” she said, suggesting a realignment of quotas to better represent today’s global challenges.
(With inputs from PTI)
