In managing national debt, France could borrow a leaf from India

European giant's subsidies and welfare spending blamed for stretched financial resources

France’s mounting debt has become a flashpoint in economic debates, with critics blaming decades of high public spending and subsidies for the country’s burden. The numbers underline how France’s trajectory has diverged from other advanced economies — and India, which has a lighter debt burden despite fiscal challenges.

 

France’s debt crossed 110 per cent of the gross domestic product (GDP) in 2023-24, from below 100 per cent in 2014. During the pandemic, the ratio ballooned to almost 115 per cent. The debt to GDP ratio of the United States and United Kingdom increased too during the pandemic but has largely stabilised now. India’s debt ratio increased from about 66 per cent in 2014 to 82 per cent by 2024 — a significant burden but more manageable compared to France.

 

France’s external debt numbers are even more striking, rising from 237 per cent of the GDP in 2019 to over 280 per cent in 2024 — a figure that exceeds government debt. External debt includes not just government liabilities but also borrowing by banks, corporations, and other entities from foreign markets. By contrast, India’s external debt is below 20 per cent of GDP, reflecting a conservative approach to overseas borrowing. 

 

However, France’s gross debt figures must be read alongside its much smaller net external debt, which was 36 per cent of the GDP in 2024. Net debt offsets a country’s external assets against liabilities, providing a clearer picture of how indebted it truly is to the rest of the world. The gap between gross and net largely reflects France’s role as a major debt issuer in global markets. Additionally, its positive net foreign direct investment position — about 15 per cent of the GDP — underscores the global footprint of French multinationals and their capacity to absorb external shocks (chart 2). 

 

Revenue expenditure is one clear structural difference between France and India. France’s revenue expenditure exceeds half its GDP — it was 55 per cent to 62 per cent from 2019 to 2024. India’s revenue expenditure is around 10-14 per cent of its GDP. The French model, heavily reliant on subsidies, social transfers, and welfare spending, has been criticised for fuelling high debt. 

 

India’s lower expenditure ratio reflects better fiscal discipline, but also highlights limited social spending compared to France.