2023-08-24 18:06:23
India remains the world’s fastest-growing economy amid strong external headwinds and has managed inflation better than most economies, he said. The country’s debt levels have come down to regarding 82% of its GDP from 89% in the pandemic year of FY21, and the fresh government borrowing is rising at a slower pace than that of the nominal GDP, he said. The external debt-to-GDP ratio stands at a very comfortable level and the government debt is predominantly held in the domestic currency. All these suggest debt sustainability isn’t really an issue for India, he added.
While the ratings agency continues to say India’s overall debt level remains way above that of similar-rated peers, strangely it doesn’t adequately appreciate New Delhi’s lower external debt level compared with others, he said. The official said the Centre’s fiscal deficit dropped from 9.2% of GDP in FY21 to 6.4% in FY23. It is estimated to ease to 5.9% this fiscal year and government is committed to reduce it further to 4.5% by FY26. “So where is the issue of debt sustainability?” he asked.
While affirming the rating and “stable outlook” for India earlier this month, Moody’s had acknowledged the country’s robust growth but it also added: “A lasting upward shift in global and domestic interest rates highlights the risks stemming from’a high debt burden and weak debt affordability, long-standing features of India’s sovereign rating which Moody’s expects to remain”.
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