OECD Economic Surveys: India 2017

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.

SPECIAL FEATURES: TAX REFORM; REGIONAL DEVELOPMENT

*[XIXe]: Dix-neuvième