A senior official at the International Monetary Fund has called on the Indian government to be more transparent about its fiscal numbers, pointing out that it lags behind other Group of 20 countries in this regard, PTI reported on Thursday. The world body’s Deputy Director Anne-Mary Gulde said India had missed its fiscal deficit targets in the last few years, and asked the Narendra Modi government to ensure “credible fiscal consolidation”. She made the remarks at a National Stock Exchange event in Mumbai on Wednesday.
Gulde said the Indian government had not addressed how it was planning to make up for giving away Rs 1.45 lakh crore as corporate tax cuts. In September, the government had announced the reduction in corporate tax from 35% to 22% in an effort to boost investment and revive the economy. The decision was taken after a prolonged slowdown in the economy. The economy grew just 5% in the first quarter of 2019-’20.
“Fiscal transparency should be increased,” the IMF official said. “It is fairly difficult for the private sector to get the full picture on fiscal standing. India is somewhat lacking in a programme on G-20 data initiative on fiscal transparency where comparative countries have all made greater progress.”
Gulde said more credible fiscal consolidation would free up financial resources for the private sector and reduce the relatively high level of India’s debt. She added that fiscal stimulus by the government cannot revive the economy because of India’s relatively high level of public debt compared to other emerging economies.
Gulde said the government had done little to offset the reduction of revenue due to corporate tax cuts. “We feel that the revenue impact needs to be considered going forward and compensated for...we would urge that fiscal policy be formulated against a more realistic background to give a clearer direction to private sector expectations,” she added.
India has set a fiscal deficit target of 3.3% for 2019-’20. However, the reduction in revenue could increase this to 4%.
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