Increased Borrowing By Government Likely To Push India's Debt To 87.6% Of GDP

Increased borrowing by the government is likely to push up India's debt further to around Rs 170 trillion, or 87.6% of the gross domestic product (GDP) in the current financial year 2020-21 (FY21), suggests the latest edition of 'Ecowrap' report by State Bank of India (SBI). Fiscal estimates have gone awry across the globe amidst higher pandemic related expenditures. Together with declining GDP growth, debt to ratio has also been adversely affected in all countries. India's debt to GDP ratio has increased gradually from Rs 58.8 lakh crore (67.4% of GDP) in FY12 to Rs 146.9 lakh crore (72.2% of GDP) in FY20. Higher level of borrowing this fiscal are likely to increase gross debt further to around Rs 170 lakh crore or 87.6% of GDP. Within this, external debt is estimated to increase to Rs 6.8 lakh crore (3.5% of GDP). Of the remaining domestic debt, component of State's debt is expected at 27% of GDP. Interestingly, the GDP collapse is pushing up the debt to GDP ratio by at least 4%.

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