Union Finance Minister Nirmala Sitharaman told the IMF that the Indian government remained committed to putting the economy on a path of fiscal consolidation in the near to medium term, setting a target of reducing fiscal deficit to 4.5 per cent by 2025-26.

Addressing the International Monetary and Financial Committee here, Sittraman said the Indian government is ready to provide additional capital to Public Sector Banks (PSBs) when needed and the inflation trajectory is downward better than expected.

Here for the annual meeting of the International Monetary Fund and the World Bank, she said that while maintaining a proper fiscal position in the near term to support the economy, the government remains committed to putting the economy on a path of fiscal consolidation. In the short to medium term.

“The federal government’s fiscal deficit is budgeted at 6.8 per cent of GDP (Gross Domestic Product) this year, and will be reduced to 4.5 per cent of GDP by 2025-26. Next year’s budget will contain medium-term macroeconomic projections. And she said the revised Budget Management and Fiscal Responsibility (FRBM) Act.

Revenue mobilization will be a key component of the medium-term fiscal strategy. The simplification of electronic billing, GST audits, accurate revenue audits and price rationalization are expected to increase GST revenue; It added that justified corporate income tax rates are also expected to improve tax compliance and tax recovery.

The finance minister said disinvestment with a focus on privatizing and monetizing sovereign assets would also support the merger.

The push for capital spending on infrastructure, including health, education and skills development projects, will continue. She said that enhanced public investment in infrastructure is expected to mobilize private investment, increase potential production and medium-term growth.

Confirming that the Indian banking system remains well capitalized, the finance minister said the stress tests conducted by the Reserve Bank of India (RBI) revealed that the scheduled commercial banks would have sufficient capital even under the severe stress scenario.

Moreover, the government is ready to provide additional capital to public sector banks when needed, she said.

The Reserve Bank of India (RBI) has continued to maintain a easing stance with repo rate cuts, liquidity measures amounting to 8.7 per cent of GDP, and has taken more than 100 actions since the onset of the COVID-19 pandemic to support certain sectors, institutions and instruments. She emphasized that the appropriate financial conditions to support the revival of growth.

“() The Reserve Bank of India (RBI) has also indicated that they will continue their stance of accommodative monetary policy for as long as necessary to revive and sustain growth on a permanent basis while ensuring that inflation remains within target,” the minister said.

Aggregate demand is gaining firmer ground, while supply-side indicators reflect an improvement in industrial activity and service sector indicators point to a sustainable recovery.

The International Monetary Fund has forecast India’s GDP to grow by 9.5 percent in 2021-22 and 8.5 percent next year.

As early indicators emerging from high-frequency indicators indicate, India is on track to meet these growth forecasts, emerging as the fastest growing major economy in 2021-2022 and beyond. Sittraman said the inflation trajectory is downward better than expected.

The finance minister said that as the scars of the epidemic heal and supply conditions are restored with productivity gains, a sustainable easing of core inflation can be expected, which will strengthen the growth-supportive stance of monetary policy.

(The title and image for this report may have been reworked only by the Business Standard team; the rest of the content is automatically generated from a shared feed.)

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