The International Monetary Fund (IMF), in its latest report 'Global Prospects and Policy Challenges' has said that India’s economic growth is likely to improve, once impact of the cash shortage linked to the currency exchange move fades. The report also expects the fiscal deficit to continue to shrink in the near-term.
In order to attain medium-term fiscal consolidation plans, the report has said that emphasis is needed on various measures such as subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST) to achieve these fiscal consolidation plans.
The report further noted that the steps has been taken by emerging economies like India to reduce excessive corporate leverage and improve bank's balance sheets or adoption of more prudent risk-management practices, including to reduce currency and maturity balance sheet mismatches, which will help reduce vulnerabilities to global financial conditions, possible capital outflows, and sharp currency movements.