Increasing debt burden on India, debt ratio may remain 84% of GDP by the end of 2022
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India’s debt to gross domestic product (GDP) ratio is estimated to be 84 per cent this year. It is higher in many emerging economies. However, the good thing is that India’s debt is such that it is not a big problem to manage.
“It will be very important to reassure people and investors that things are under control,” he said. Mauro said, ‘In terms of debt ratio, we estimate that India’s debt-GDP ratio will be around 84 percent. It is more than many emerging countries.” He added, “Definitely being the most populous country in the world and being a very large, emerging economy, India has many unique characteristics.”
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“The other thing that is unique in a way, compared to other emerging economies, is that India has a substantial portion of its debt in domestic currency and a large investor base,” Mauro said. All these things are good and because of this the level of debt management is not a big problem. ”He said that the need to take loans every year is very important. This is about 15 percent of GDP. ,
Overall, there is a need to monitor the debt situation,” Mauro said. Given this, there is a need to be cautious about the fiscal deficit. He said that at present, the fiscal deficit is around 10 per cent of GDP. This is most of the emerging economies. About 6.5 per cent of the total fiscal deficit is with the central government while the rest is with the states.
The IMF official said, “Given the global situation and the situation in different countries, inflation is slightly higher… In India’s favor is that the economic growth rate remains high.” This helps to keep the ratio at a stable level. Mauro said. If the growth rate remains high, it may be brought down, but without reducing the fiscal deficit it will be difficult to control inflation and on the other hand it will also be difficult to reduce the debt ratio i.e. reduction in deficit is necessary. .’