NEW DELHI, Feb. 7 (Xinhua) -- Despite the gloom in global markets, India's economic growth is expected to accelerate to 7-7.5 percent in the next fiscal, as experts say the country has now managed to overcome the "temporary setback" and pick up.
The twin exercises of demonetization and a unified tax reform, popularly known as Goods and Services Tax (GST), in November 2016 and mid-2017, respectively, had hit the economy and set in a gloom that was expected to slow down India's growth.
"The slowdown was a result of a rather chaotic rollout of the twin policies besides the perception of lack of creation of new jobs. Things are being streamlined now and the long-term benefits of these policies will begin to emerge," Bisht Singh, an economist in Delhi, told Xinhua recently.
"If the idea behind demonetization was to root out corruption and black money, GST made tax collection efficient, empowered small businesses and enabled financial inclusion. Temporary disruptions apart, the growth and optimism showed in the Economic Survey," he added.
The Indian government released the Economic Survey, a factsheet of the country's economic health, a couple of days ahead of its annual budget on Feb. 1.
Experts credit the stability that the Indian economy displays at present after a tough phase to the many decisions taken by the government.
"Whenever the government took serious risks by taking hard-hitting decisions, it followed it up with stimulus packages to revive the economy, thus remaining agile towards ensuring that there was no stagnation," Prof D.S. Mathur, formerly of the economics department at Delhi University, told Xinhua.
Some opine that India's new growth opportunities are being reflected in the push factors by the government.
"India's middle class and youth are becoming highly aspirational. The economic roadmap laid out by the government in the past three years addressed this aspiration," Ravinder Ahuja, another Delhi-based economist, said to Xinhua in a recent interview.
Experts say that income tax collections as a percent of the gross domestic product (GDP) are seen to rise sharply once average incomes increase.
India's fiscal foundations, which are weak because of low tax revenue, will start to climb as the GDP will rise, Sumit Kuhar, a stock market analyst, told Xinhua.
"Wage earners in the labor force will become more formalized, bringing in tax collections. We can also expect adequate job creation, investment activity and export growth," Kuhar said.
Meanwhile, many have words of caution for the government.
"The combination of stronger growth with greater macro risks suggests that the Indian finance minister should avoid fiscal adventurism. The economic recovery has enough internal strength to move ahead without fiscal support while it makes sense to preserve fiscal firepower in case there is a global shock over the rest of the year," said Ahuja.
