Scope for food subsidy cut, says IMF

Scope for food subsidy cut, says IMF

Agency News

There is much scope in India for cutting untargeted food and fertilizer subsidies and increasing  revenue administration, according to the International Monetary Fund.

The IMF pointed out that 'when one looks at some of the populist proposals announced by political parties during this election season, the important thing is to look at the benefits but also look at the costs and at the details.'

Mr. Paolo Mauro, Deputy Director in the  IMF Fiscal Affairs Department, said that ' when one looks at the case of India, there is a lot of scope for reducing untargeted food and fertilizer subsidies, and for enhancing revenue administration, including for the GST, which was a transformational positive reform. But, again, even there, improved tax compliance would be a priority,'

On on announcements made by political parties during election time, he said in India’s case, the priority continued to be gradual fiscal consolidation because the gross general government to Gross Domestic Product (GDP) ratio is at about 70 per cent.

'You also have a very rapid growth rate. The economy is growing in excess of 7 per cent, and the objective is to make sure that that growth is inclusive and it filters down to poverty reduction,' he pointed out.“