Economic Survey 2023: India’s debt-to-GDP ratio sees 'modest' rise over last 15 years

A positive growth-interest rate differential helped keep government debt-to-GDP ratio at sustainable levels, said the Economic Survey.

The Union government's debt-to-GDP ratio has increased only modestly over the last 15 years, while that of other countries has increased substantially over the same period, according to the Economic Survey 2022-2023.

The Economic Survey was tabled on the Parliament on January 31.

Also read: The Economic Survey 2022-23: A stock-taking report for the Indian economy

“A comparison of the change in General Government debt to GDP ratio from 2005 to 2021 across the countries highlights a substantial increase for most countries. For India, this increase is modest, from 81 percent of GDP in 2005 to around 84 percent of GDP in 2021 (Figure III.19). It has been possible on the back of resilient economic growth during the last 15 years leading to a positive growth-interest rate differential, which, in turn, has resulted in sustainable Government debt to GDP levels,” it stated.

In FY21, which was a pandemic year, India’s debt-to-GDP ratio had gone up to 89.6 percent and the ratio is expected to fall to 84.5 percent by end of March 2022.

Also read: Economic Survey 2022-23: FY24 baseline GDP growth seen at 6.5%

" The General Government liabilities as a proportion of GDP increased steeply during FY21 on account of the additional borrowings made by Centre and States on account of the pandemic. However, the ratio has come off its peak in FY22 (RE). The General Government deficits as a per cent of GDP have also consolidated after their peak in F21. The General Government is expected to follow the path of fiscal consolidation in the medium term," stated the survey.