‘Govt to focus on public debt management’

NEW DELHI: The government will focus more on debt management compared to its current focus on fiscal deficit for the next few years, as there is a “huge overhang of public debt”, Economic Affairs Secretary Subhash Chandra Garg said on Saturday. Speaking at the Annual General Meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) here, he noted that credit rating agencies give significant weightage to the debt-to-GDP ratio of a country.

By comparing what a country owes with what it produces, the debt-to-GDP ratio indicates its ability to pay back its debts. Currently, India’s debt-to-GDP ratio is around 70%.

“We still have overhang of a very large debt, of public debt especially. Maybe in next four to five years, that is the area we will focus. Most credit rating agencies and otherwise give a lot of weightage to the debt-to-GDP ratio in the country.

“We focus more on the fiscal deficit currently, but going forward that (public debt) is the area that we will focus,” the Secretary said. Fiscal deficit of the country, he said is close to 3%, a level considered to be reasonably ideal. On inflation rate, he observed that India has “more or less conquered” rise in prices.

“Things can go wrong because of external factors, like oil which we don’t have in our control. But I think we are reasonably assured that inflation is less of a worry going forward.”

Talking about the country’s economic situation, Garg said the number of people engaged in the agriculture sector should come down to around 10% for the country to prosper.