As the Indian economy enters a slowdown phase, the International Monetary Fund (IMF) raised concerns over revenue shortfall and its impact on the economic situation.
The IMF flagged these issues as a part of its annual Article IV consultations with India, according to an Indian Express report. It also questioned the revenue targets the Modi government has set amid the fiscal slowdown.
The agency is said to have asked the Finance Ministry, which is being led by Nirmala Sitharaman, if the targets for both direct and indirect taxes projected in the Union Budget are achievable. The queries that were posed in a questionnaire also raised certain roadblocks in the implementation of GST while emphasising on the need to simplify the indirect tax regime.
Article IV consultations typically involves an IMF team of economists visiting a member country to assess the fiscal situation and the government's economic and financial policies. The findings are then relayed to the IMG management and discussed with the Executive Board before it is summarised and sent to the country's government.
Several reports have raised the issue of the widening gap between the tax revenues and the targets with direct tax revenue growth sharply depreciating by 4.7 per cent for April 1 to August 15. Now, with the slowdown phase setting it, it is unlikely that the government will be able to meet its direct tax targets.
A meeting of Finance Ministry officials is slated to take place this week.
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