Economic growth of around 7½% makes India the fastest-growing G20 economy. The acceleration of structural reforms, the move towards a rule-based policy framework and low commodity prices have provided a strong growth impetus.

1. 2017 OECD ECONOMIC
SURVEY OF INDIA
Strong reforms
are boosting inclusive growth
@OECD
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http://www.oecd.org/eco/surveys/economic-survey-india.htm
http://oe.cd/1No
Delhi, 28 February 2017

2. India is undertaking major reforms
Prosperity is rising quickly, but growth
could be more inclusive
Comprehensive tax reform, building up on
the landmark GST reform, would lift all
boats
Reducing regional inequality is key
Main messages
2

3. 3
Growth has been very strong
Source: CSO; and OECD Economic Outlook 100 database.

4. 4
Inflation is under control
Source: Reserve Bank of India.

5. The current account deficit has narrowed
5
Source: Reserve Bank of India.

6. 6
Exposure to external risks is relatively low
Note: Foreign-currency external liabilities are approximated by the sum of a positive difference between debt securities issued by nationals and
residents from the BIS debt securities database (a proxy for off-shore external bond liabilities) and external liabilities for financial derivatives and
other investments (the latter includes bank loans) from the IMF international investment position database.
Source: Reserve Bank of India; Bank for International Settlements; and OECD calculations.

7. Structural reforms are boosting growth
Source: OECD compilation.
Key reforms approved Key ongoing reforms
Goods and Services Tax (GST)
Financing system for the states
FDI deregulation
Bankruptcy laws
Inflation targeting
Budget making process
Competitive and co-operative federalism
Subsidies (oil, food and fertilisers)
Financial inclusion
Corporate income tax
Tax evasion and compliance
Ease of doing business
Banks
Labour regulations
7

8. 8
India has been a top reformer
Note: The FDI Regulatory Restrictiveness Index reflects the situation at end 2016 for India and at end 2015 for other countries. Data for Costa Rica
refer to the period 2012-15.
Source: OECD FDI Regulatory Restrictiveness Index database.

9. 1.1 billion unique identification numbers
(Aadhaar) created to better target support to
the poor
276 million bank accounts opened for the poor
since August 2014
34 million toilets built since October 2014
 7 108 villages electrified in 2015-16 (out of the
18 452 unelectrified villages)
Inclusiveness stands high on the agenda
9

10. It is crucial to revive investment
10
Note: Gross fixed capital formation.
Source: Central Statistical Organisation.

11. 11
Non-performing loans are high
Source: Reserve Bank of India and IMF.

12. 12
More progress on FDI is needed
Note: The FDI Regulatory Restrictiveness Index reflects the situation at end 2016 for India and at end 2015 for other countries. Data for
Costa Rica refer to the period 2012-15.
Source: OECD FDI Regulatory Restrictiveness Index database.

13. 13
More social infrastructure is needed in some
regions
Source: NSS Report No. 566: Status of Education and Vocational Training in India; and Census of India.
Data are for 2011-12.

14. 14
Rural areas lack access to core
infrastructure
Source: Census of India 2011.

15. 15
Public debt is high
Data for India are revised estimates by the Reserve Bank of India for the fiscal year 2015-16.
Source: OECD Economic Outlook 100 database; Reserve Bank of India; Brazilian ministry of economy; and World Bank World
Development Indicators database.

16.  Strengthen public banks' balance sheets by
recapitalisation, bank consolidation and lowering the 51%
government share
 Increase public spending on physical and social
infrastructure
 Gradually extend the subsidy reform to other products
including fertilisers and food
 Raise more revenue, especially from property and personal
income taxes, to ensure that government debt to GDP
return to a declining path
Key recommendations to strengthen
macroeconomic resilience and growth
16

17. Tax reforms to make growth
more inclusive

18. 18
GST is a landmark reform
but India needs to raise more revenue
Source: OECD Economic Outlook 100 database; OECD Revenue Statistics database; World Bank; Reserve Bank of India; Central
Statistical Organisation.

19. 19
The personal income tax raises little revenue
Note: Social security contributions are not included.
Source: OECD Economic Outlook 100 database; OECD Revenue Statistics database; World Bank; Reserve Bank of India; Central
Statistical Organisation.

20. 20
Combined corporate tax rates are high
Note: Foreign source income is assumed to be exempted in the residence countries. For India, the 45% rate comprises the 30% CIT rate on
corporate profits, plus 12% surcharge on CIT and 3% earmarked tax (on CIT and surcharge amount), plus the 15% dividend distribution tax.
Source: Thomas et al. (forthcoming).

21. 21
Reducing the corporate tax rate would
attract FDI
Note: FDI net inflows are the value of inward direct investment made by non-resident investors in the reporting economy net of repatriation of
capital and repayment of loans.
Source: OECD FDI main aggregates database.

22. 22
More resources for the tax administration
would raise tax compliance
Note: Data for India relates to the CBDT.
Source: OECD (2015), Tax Administration 2013: Comparative Information on OECD and other advanced and emerging economies.

23.  Remove the tax expenditures that benefit the rich most
(e.g. those related to housing investment) and freeze the
income thresholds from which rates apply.
 Enable municipalities to raise more real estate taxes.
 Implement the reduction in the corporate income tax rate
from 30% to 25% while broadening the base.
 Increase the number and training of staff employed in the
tax administration.
Key recommendations to ensure taxes better
support inclusive growth
23

24. Regional development

25. Regional disparities are large
25
Note: Regions in OECD member countries have been classified according to two territorial levels to facilitate international comparability.
The territorial level 2 (TL2) consists of macro-regions, states in the case of India.
Source: OECD Regional Statistics database.

26. 26
There is little evidence
that poor states are catching up
Note: The population data are from Census 2001 and 2011. For the other years, population was estimated by linear interpolation and
extrapolation.
Source: Central Statistics Office; and NSSO.

27. 27
Rural poverty is very high in some states
Note: Poverty is calculated by using the Tendulkar methodology, which expresses the poverty line in terms of monthly per capita
consumption expenditure based on a mixed reference period. Data refer to FY 2011-12.
Source: Reserve Bank of India.

28. 28
Productivity differences across states
contribute to regional inequalities
Note: Labour productivity is measured as the ratio of value added (GDP) per worker.
Source: CSO; and OECD Economic Outlook 100 database.

29. 29
Agriculture still employs many
Notes: Employment data for China refer to the primary sector (including farming, forestry, animal husbandry and
fishery).
Source: NSSO; National Bureau Statistics of China; and World Bank.

30. 30
Agriculture productivity is low
Notes: Employment data for China refer to the primary sector (including farming, forestry, animal husbandry and
fishery).
Source: NSSO; National Bureau Statistics of China; and World Bank.

31. 31
States’ ability to tailor public policies is high
Source: CSO; and OECD Economic Outlook 100 database.

32. 32
Urban population will increase fast in India
Note: Forecasted data are shown in red.
Source: United Nations, Department of Economic and Social Affairs, Population Division (2014).

33. 33
Urbanisation gains are not fully exploited
Note: Productivity is calculated as a median value added per worker in the organised manufacturing sector.
Source: NSSO, Employment and unemployment survey, round No. 68; and World Bank Enterprise survey 2014.

34. 34
Local air pollution is high
Note: Indian cities are marked in red. The other selected cities are marked in blue. PM2.5 refers to particulate matter less than 2.5
micrometers in diameter; these fine particles are particularly damaging to health as they can penetrate deep into the lungs when inhaled.
Source: World Health Organisation, Ambient Air Pollution Database, May 2016.

35.  Continue efforts to improve universal access to core public
services
 Continue the benchmarking of states and strengthen the
sharing of best practices, in particular on labour
regulations and land laws
 Enable reforms in land ownership laws, improve the land
registry and step up the digitisation of land records
 Give municipalities more and clearer spending and taxing
powers
Key recommendations for a strong and
balanced regional development
35

36. 36
For more information…..
Disclaimers:
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without
prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers
and boundaries and to the name of any territory, city or area.
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