India’s government debt at safe levels: Nirmala Sitharaman
Debt-to-GDP ratio was 81% in FY22, while Japan’s was 260%, and US 121%, she said
Finance minister Nirmala Sitharaman on Monday said India’s government debt, including that of states, is safe and prudent going by debt sustainability norms and that the country is in a better position than others. The minister’s defence of the government’s debt management comes amid a political debate over economic indicators and the track record of the ruling and opposition parties in office.
Sitharaman said in a social media post that India’s debt-to-GDP ratio was at 81% in FY22, compared with 260.1% for Japan, 121.3% for the US, 111.8% for France and 101.9% for the UK.
Sitharaman said that in a comparative analysis with other low and middle-income countries too, India's external debt scenario was robust.
She said India's share of short-term debt in the total external debt is 18.7%, which is lower than that of China, Thailand, Turkey, Vietnam, South Africa, and Bangladesh.
A lower proportion of short-term debt is beneficial as it implies less immediate repayment pressure. When considering the ratio of total external debt to Gross National Income (GNI), India emerges as the third least indebted country among all such economies, the minister said.
The ruling Bharatiya Janata Party and the opposition Congress party have in recent months defended how they managed the economy and government finances while in office and have criticized the way the other did.
The ruling party had also tabled a ‘black paper’ in Parliament, accusing the previous United Progressive Alliance (UPA) regime of undermining the country’s macroeconomic fundamentals, while the Congress hit back at the government citing price rice and unemployment.
The manifestos of the two parties are loaded with their economic agenda for the nation.
Experts said that the latest spike in debt levels is on account of the covid pandemic. The Centre’s fiscal deficit had gone up to 9.2% of GDP in the pandemic year of FY21 from 4.6% in the year before, but subsequently moderated to 5.8% in the revised estimates for FY24. For the current fiscal, the estimate is 5.1%.
India's share of short-term debt in total external debt is 18.7%, which is lower than that of China, Thailand, Turkey and Vietnam, the FM said