RBI economists, in a report released on Tuesday, rejected the IMF view that India’s debt-GDP ratio has the potential of shooting past 100 per cent if historical shocks materialise and hence the country needs to go cut government expenditure.
In an article written in the latest RBI bulletin, deputy governor Michael Patra and a few other colleagues have roundly rejected the IMF’s view that if historical shocks materialise, India’s general government debt would exceed 100 per cent of GDP in the medium term
Empirical findings show that medium-term complementarities between judicious fiscal consolidation and growth outweigh the short-run costs, says the RBI article titled 'The Shape of Growth Compatible Fiscal Consolidation'
The Indian government should focus on development, as per a research paper by RBI. The paper shows that the general government debt-GDP ratio could decline to 73.4% by 2030-31, 5 percentage points lower than the IMF s projection. Further fiscal tightening is needed for sustainable growth.