India likely to have stable debt-to-GDP ratio going forward, says IMF official

India is expected to have a stable debttoGDP ratio going forward a senior official from the International Monetary Fund said on Wednesday and recommended rationalization and simplification of Goods and Services Tax GSTAccording to Paolo Mauro Deputy Director of the IMF Fiscal Affairs Department there will be a gradual resumption of the rise in the global public debttoGDP ratio in the mediumtermOur baseline projection is for the global public debttoGDP ratio to reach 100 per cent again by 2028 It is going to take a few years but that seems to be the direction of travel Mauro told PTI in an interviewIn 2020 there were massive interventions on the part of governments around the world to support people and firms That implied a lot of spending and a big rise in government debtsAlso Read Chinas GDP falls to three per cent in 2022 second lowest in 50 yearsWe reached the peak at the end of 2020 of a 100 per cent when it comes to the ratio of public debttoGDP In subsequent years there was a recovery and globally at the end of 2022 the debttoGDP ratio was 92 per centThe situation has changed because at the peak of the pandemic both central banks and governments were very focused on supporting people supporting firms avoiding an economic implosion avoiding deflation right now they are in a completely different situation where inflation is high and the economic activity is certainly much more buoyant in that contextIn China the IMF projects a sizable increase in the debt ratio because the pace of economic growth may be a little bit slower than in previous years partly because of aging of the populationLikewise in the United States and to a lesser extent in the United Kingdom in Japan in France there is also going to be some increase in debt ratiosIn countries like India we project the stable debt ratio going forward Brazil we see an increase as well In the case of many low income countries and smaller advanced economies we project the decline in the debt ratio and that would include Germany or Italy and others he saidResponding to a question on India Mauro said this years Union Budget appropriately reduces the deficit and appropriately emphasizes infrastructureThe fact that the deficit is being reduced helps the Central Bank Another good feature is that there is a reduction in subsidies that is coming from the unwinding of those exceptional measures that were taken during the pandemic he saidGoing forward he recommended rationalization and simplification of GSTWe are not talking about an overhaul but were talking about maybe rationalizing it a little bit There are many items that are subject to preferential GST treatment and lots of different rates And so just simplifying it a little bit would be helpful Mauro saidOn the fuel excise tax cuts that were introduced in early 2022 he said it would be appropriate to reverse those again because at some point you dont want to be giving these generalized subsidies to everybody Its important to support those who are truly needy but now not everybodyThe other thing is to broaden the base for the corporate income tax and the personal income tax he said cautioning that fiscal costs might emerge in the futureThere are some companies in particular in the electricity distribution sector that given everything that has happened in energy markets may be under difficulties and therefore there may at some point be the need for intervention on the part of the government Mauro saidThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever