IMF projects India's general fiscal deficit at 9.9% of GDP for FY23

India’s general government fiscal deficit (states and Centre combined) has been projected at 9.9 per cent of GDP for FY23 as rising energy and food prices will put renewed pressure on the fiscal gap, the International Monetary Fund (IMF) said in its report.

With renewed uncertainty on the back of the Russia-Ukraine war, commodity markets have been disrupted fuelling inflation. Governments globally will have to shape their responses against the backdrop of increasing inflation, slowdown in growth, high debt and tightening credit conditions, the IMF said in its fiscal monitor report.

The price of fertilisers has increased by about 80 per cent over the last 12 months, and the additional tension could impact future harvests in India, the US and Brazil, among other countries, said the report titled Fiscal Policy from Pandemic to War.

Rising energy and food prices will put renewed pressure on fiscal deficits, IMF First Deputy Managing Director Gita Gopinath said in a tweet.

The high degree of uncertainty will affect economies differently. This will put pressure on their growth and public finances, the report said.  “Many of these countries have faced scarring from the pandemic and have little fiscal space to buffer these new shocks. Some commodity exporters, especially large oil exporters, will benefit from significant revenue windfalls,” it said.