Supporting India’s decision to reduce corporate income tax, the International Monetary Fund (IMF) said the step has a positive impact on investment but it should address continued fiscal consolidation and secure long-term stability of the fiscal conditions. “We believe India still has limited fiscal space so they have to be careful,” a top IMF official said.
Following a marked slowdown in the last two quarters in India, the economy is expected to grow at 6.1 per cent this fiscal year, picking up to 7.0 per cent in 2020, Changyong Rhee, Director of IMF’s Asia and Pacific Department, said recently in Washington DC.
Anne-Marie Gulde-Wolf, Deputy Director of the department, urged India to address the non-banking financial sector issues, according to a report. “While there have been improvements that have been put in motion, including efforts to recapitalise the State banks, the issue of non-bank financial institution remains partly unresolved and regulatory equity is one of the issues that needs to be achieved,” she said. The government is aware of it, she added. India overall has a fairly high level of debt and fiscal consolidation needs to be a priority, she said.
