IMF’s Fiscal Monitor (April 2025) presents a stark assessment of global fiscal health, warning of rising policy uncertainty, trade disruptions, and financial tightening, with public debt expected to exceed 100% of global GDP by 2030—an ominous backdrop for India’s already strained fiscal landscape. With a projected general government deficit of 6.9% and a debt ratio of 80.4%, India faces the complex task of sustaining growth-oriented public investment while addressing mounting debt pressures. Global tariff shocks and subsidy obligations continue to weigh heavily on the revenue base, while elevated interest payments, driven by sustained borrowing and rising rates, threaten to crowd out vital developmental spending. The IMF calls for a credible medium-term fiscal framework anchored in tax base widening, rationalisation of subsidies, and improved GST efficiency to restore fiscal buffers and build resilience against geopolitical and financial volatility.
The Fiscal Monitor stresses that durable reforms, particularly in energy subsidies and pensions, must align not just with economic imperatives but with public sentiment, an insight especially salient for India. With explicit energy subsidies still consuming a significant share of the GDP and an ageing population set to double by 2050, reforms are both necessary and politically delicate. As per the IMF, success will depend on gradual implementation, targeted compensation, and transparent communication to cultivate public trust. Given prevailing institutional scepticism and electoral pressures, India must adopt a sentiment-sensitive strategy, sequencing reforms carefully, broadening pension coverage, especially in the informal sector, and building stakeholder engagement. Ultimately, India’s fiscal policy must evolve from reactive populism to anticipatory governance, grounded in fiscal realism, empathetic reform, and inclusive, long-term nation-building.
