India's Debt Position Stronger Than Global Counterparts: Sitharaman

New Delhi, May 14 (KNN) Finance Minister Nirmala Sitharaman asserted on Monday that India's government debt, including that of states, is safe and prudent according to debt sustainability norms and that India finds itself in a better position compared to other countries.

Providing comparative figures, Sitharaman highlighted that India's debt-to-GDP ratio stood at 81 per cent in the fiscal year 2022, significantly lower than Japan's 260.1 per cent, the US's 121.3 per cent, France's 111.8 per cent, and the UK's 101.9 per cent.

In a comparative analysis with other low and middle-income countries, the Finance Minister claimed that India's external debt scenario was robust.

She pointed out that India's share of short-term debt in its total external debt is 18.7 per cent, which is lower than countries like China, Thailand, Turkey, Vietnam, South Africa, and Bangladesh.

A lower proportion of short-term debt is advantageous as it implies less immediate repayment pressure.

When considering the ratio of total external debt to Gross National Income (GNI), Sitharaman stated that India emerges as the third least indebted country among all such economies.

Experts attribute the recent spike in debt levels to the COVID-19 pandemic.

The Centre's fiscal deficit had surged to 9.2 per cent of GDP in the pandemic year of FY21 from 4.6 per cent in the preceding year but subsequently moderated to 5.8 per cent in the revised estimates for FY24. For the current fiscal, the estimate stands at 5.1 per cent.

D.K. Srivastava, chief policy advisor at EY, stated, "The combined debt-to-GDP ratio of 81 per cent is primarily the result of the impact of COVID-19 and the fiscal stimulus initiated at that time."

He added that while slippage happens quickly, improvement takes time, and it will take a few years before India reaches closer to the Fiscal Responsibility and Budget Management (FRBM) level, which prescribes an overall debt level of 60 per cent of GDP.

(KNN Bureau)