Roadmap in 6 months to cut public debt: Pranab

The government plans to come out with the first-ever roadmap within six months for reducing public debt, which has been rising after the exchequer got a hit due to stimulus packages.

"As part of the fiscal consolidation process, it would be for the first time that the government would target an explicit reduction in its domestic public debt-GDP ratio," Finance Minister Pranab Mukherjee told the Parliament while presenting the Budget for 2010-11 on Friday.

The Finance Minister's statement came in the wake of recommendations by the 13th Finance Commission for the combined debt of the Centre and the States to be capped at 68 per cent of the GDP by 2014-15.

On this front, Mukherjee said the government would come out with a roadmap and regular reports to mark the progress.

"I intend to bring out, within six months, a status paper giving a detailed analysis of the situation and a roadmap for curtailing the overall public debt. This would be followed by an annual report on the subject," he said.

The fiscal consolidation path, as prescribed by the Commission, embodies steady reduction in the augmented debt stock of the Centre to 45 per cent of GDP by 2014-15, and of the states to less than 25 per cent of GDP by 2014-15.

The Central government debt is projected at 54.2 per cent of the GDP at the end of 2009-10, as per the Commission's report. The aggregate debt to GDP ratio of the states was stated at about 27 per cent of GDP in 2007-08.

Barring for the counter-recessionary expenditure in 2008-09 and 2009-10 that allowed for temporary hikes in fiscal and revenue deficits, the small reduction in the debt-GDP ratio of the states should be feasible, the report said.