Key Points
The ministry of finance, Friday, clarified its position on the International Monetary Funds latest Article IV consultations staff report highlighting that the general government debt could be 100% of GDP by FY28, stating that centre and states were on path of consolidation and the general govt debt is expected to decline substantially in the medium- to long-term...
It is also noteworthy that the same report indicates that under favourable circumstances, the General Government Debt to GDP ratio may decline to below 70 per cent in the same period..
Therefore, any interpretation that the report implies that General Government debt would exceed 100% of GDP in the medium term is misconstrued, the ministry said...
The ministry noted that India had been able to reduce its general government debt (including centre and state) to 81% in FY23 from 88% in FY21 and the centre was on track to achieve its stated fiscal consolidation target...
It is important to note that General Government Debt in India is overwhelmingly rupee-denominated, with external borrowings (from bilateral and multilateral sources) contributing a minimal amount, the ministry stated, highlighting that rollover risk was low and largely immune from volatile forex movements...
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