India should avoid fiscal stimulus and reduce public debt, IMF says

Government needs a credible consolidation path to rein in debt, including reducing subsidies and boosting the tax base, says IMF.

India should avoid a fiscal stimulus to spur the economy, and focus instead on cutting public debt so that financial resources can be freed up for investment, the International Monetary Fund said.

While the government has a budget deficit target of 3.3% of gross domestic product in the year through March, a better reflection of the fiscal position is the public sector borrowing requirement, which the IMF estimates has increased to about 8.5% of GDP.

“Economic development projects and enhanced social initiatives in India will be vital in the coming years,” the IMF said in a statement accompanying its annual Article IV