IMF sees India’s combined debt-to-GDP ratio rising for 4 yrs starting FY24
In its latest Fiscal Monitor report, the IMF said India’s combined debt-to-GDP ratio (Centre plus states) will rise a tad to 83.2 per cent in FY24 and will hit a high of 83.8 per cent in FY27 before it starts to moderate.
The IMF projected that India’s combined fiscal deficit (Centre + states), which hit a high of 12.9 per cent in FY21 will continue to moderate to touch 7.6 per cent in FY29.
However, Paolo Mauro, deputy director, fiscal affairs department at the IMF said the debt to GDP ratio in India would remain stable in the medium term unlike some other large economies where the Fund sees a continued increase. “The debt ratio in India right now is 83 per cent, so it’s high. The good news is that it is largely in domestic currency held domestically. It’s also fairly long maturity, so those are the positives. The other positive is that because we project very strong economic growth into the medium term, that is going to allow the debt to remain stable,” he added.
The report clarified that IMF’s estimates differ from the Indian government, particularly regarding disinvestment and license-auction proceeds, net versus gross recording of revenues in certain minor categories, and some public sector lending. “Starting with FY2020/21 data, expenditure also includes the off-budget component of food subsidies, consistent with the revised treatment of food subsidies in the budget. The IMF staff adjusts expenditure to take out payments for previous years’ food subsidies, which are included as expenditure in budget estimates for FY2020/21,” it added.
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