India’s high debt burden and weak debt affordability continue to be a cause for concern for policymakers. The country’s total debt stood at 98.5% of its GDP in the financial year 2022-23, up from 93.6% in the previous year. This high level of debt is putting pressure on the government’s finances and could limit its ability to invest in critical areas such as infrastructure and social welfare.
One of the main reasons for India’s high debt burden is the country’s large fiscal deficit. In the financial year 2022-23, the fiscal deficit was 7.8% of GDP, which is higher than the target set by the government. This deficit is financed through borrowings, which adds to the country’s debt burden.
Another reason for India’s high debt burden is the country’s large borrowings from domestic and foreign sources. In the financial year 2022-23, the government raised around 6.5 trillion rupees through market borrowings, which is higher than the previous year. This has led to an increase in the country’s debt burden.Weak debt affordability is another issue that India is facing.
The country’s debt-to-GDP ratio is high, which means that the government has to spend a significant portion of its revenues to service its debt. This leaves less money for other critical areas such as infrastructure development and social welfare.To address these issues, the government has taken several measures such as increasing revenue collection, reducing expenditure, and improving the efficiency of public expenditure.
The government has also introduced measures to improve the country’s debt affordability, such as reducing the interest burden on the debt.In conclusion, India’s high debt burden and weak debt affordability are major challenges for the country. The government needs to take steps to reduce the level of debt, improve the efficiency of public expenditure, and increase revenue collection to ensure the sustainability of the country’s finances. Only then can India achieve sustainable economic growth and development.