In its annual country report, the IMF said the government’s decision to ensure a 50 per cent premium over cost of farm production “could skew farmers’ production decisions, add to inflation, and enlarge the fiscal burden”
The $2.6-trillion Indian economy is like an “elephant starting to run” and will remain one of the world’s fastest-growing economies, aided by structural reforms, the International Monetary Fund (IMF) said on Wednesday. However, it needs to simplify the goods and services tax (GST) structure and take advantage of strong growth to trim debt more aggressively than planned.
In its annual country report, the IMF said the government’s decision to ensure a 50 per cent premium over cost of farm production “could skew farmers’ production decisions, add to inflation, and enlarge the fiscal burden”, so “their use (backed by assured procurement) should only be temporary and limited to correcting market failures”.
It cautioned that India’s debt (at 70.4 per cent of the GDP in FY18) is “close to the thresholds that raise the likelihood of debt distress among emerging market economies”. So, a more ambitious medium-term fiscal consolidation path is required that is consistent with the FRBM review committee’s target of trimming the government debt to 60 per cent of the GDP by FY23. The government wants to achieve this target by 2025.

indianexpress.com