Minister of state for finance Pankaj Chaudhary, in a written reply in the Rajya Sabha, stressed that the risk profile of the debt “stands out as safe and prudent in terms of accepted parameters of an indicator-based approach for debt sustainability”. The government debt is held predominantly (about 95%) in the domestic currency, he said, seeking to assuage fears of forex risks.
Chaudhary said per capita debt of the central government rose to Rs 58,709 as of March 2023 from Rs 29,127 in March 2012. He, however, added that the debt-to-GDP ratio (of the central government) is a “better measure to reflect debt burden in the country”.
The government, the minister asserted, has initiated a number of measures to keep the debt at a reasonable level, which include “delicately balancing the need for broad-based and sustained economic revival and fiscal consolidation”. It has pledged to reduce the fiscal deficit to a level below 4.5% of the GDP by FY26; it had hit 9.2% in the pandemic year of FY21 and is estimated to drop to 5.9% in FY24.
“Increasing the buoyancy of tax revenue through improved compliance, improving efficiency and effectiveness of public expenditure, and augmenting productive efficiency of the economy, among others, are the important measures taken by the Government to bring down the debt and strengthen the economy,” Chaudhary said.
The central government’s debt-to-GDP ratio had dropped to 52.3% in FY19 from 53.5% in 2011-12, before spiking in the wake of the pandemic due to “measures taken by the government to provide relief to the vulnerable sections of society and also due to decline in revenue generation during the time of COVID-19 pandemic”, the minister said.