IMF projects India's debt ratio at 84% of GDP by year-end
Washington, October 12
India’s debt ratio is projected at 84 per cent of its GDP by the end of 2022, which is higher than many emerging economies, but its debt is a little bit easier to sustain, a senior official of the International Monetary Fund (IMF) has said.
Stressing that it is important for India to now have a very clear medium-term objective on the fiscal anchor, Paolo Mauro, Deputy Director, Fiscal Affairs Department, IMF, said there’s still not a whole lot of clarity. “It will be very important to give reassurance to people and to investors that things are under control, and things are going to become less vulnerable over time,” Mauro said.
India relatively a bright spot
Everyone is slowing down in terms of economic growth. India has not remained un-impacted, but is doing better. —Krishna Srinivasan, IMF director, Asia-pacific
“In terms of the debt ratio, we’re projecting it at about 84 per cent of GDP at the end of 2022. That is higher than in many emerging economies,” he said. Krishna Srinivasan, IMF Director of Asia and Pacific Department, said when everyone was slowing down in terms of economic growth, India had not remained un-impacted, but “is doing better and is in a relatively bright spot compared to other countries”.
Mauro too said India had a lot of special features being the most populous country in the world by now and being a very large, emerging economy. “The other things that are special in a way or distinctive compared with other emerging economies are that most of India’s debt is in non-indexed domestic currency and there’s a large investor base from India. So those are good features to have and that’s what makes this debt a little bit easier to sustain,” he said.
“Having said that, the rollover, the necessity to borrow every year is very significant. It’s about 15 per cent of the GDP,” he said.
“So, in some ways, the debt vulnerabilities are something that one needs to keep an eye on and be mindful of the fiscal deficit, which is about 10 per cent of the GDP right now,” he said, but added another good thing for India was that growth was traditionally very high.
