Lok Sabha Question No. 2408 (UNSTARRED), answered on 2022-08-01
Subject: Debt-to-GDP Ratio
Ministry: FINANCE
Asked by: Sushil Kumar Singh

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA UNSTARRED QUESTION NO.2408

TO BE ANSWERED ON MONDAY, THE 1 ST AUGUST, 2022 SRAVANA 10, 1944 (SAKA)

## Debt-to-GDP Ratio

## 2408. SHRI SUSHIL KUMAR SINGH:

Will the Minister of FINANCE be pleased to state:

- (a) The details of debt-to-GDP ratio during the last five years;
- (b) The yearly interest burden of the Government during the last five years;
- (c) The yearly interest burden of the Government during the next five years, year-wise;
- (d) The steps being taken to reduce India's debt-to-GDP ratio;
- (e) Whether the Government plans to amend the Fiscal Responsibility and Budget Management Act; and
- (f) If so, the details thereof;

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) The details of debt-to-GDP ratio during the last five years are provided at Annexure-I .
- (b) The  details  of  the  yearly  interest  burden  of  the  Government  during  the  last  five  years  and budget estimates (BE) for current financial year are provided at Annexure-II .

(c) The  Government  of  India  mobilizes  funds  required  to  meet  its  fiscal  operations  during  the financial  year  by  issuing  Dated  Securities,  Treasury  Bills,  Cash  Management  Bills,  Special Securities, WMA/OD (if necessary), and funds from Public Account etc. The interest incidence comprises interest on outstanding debt/liabilities which is a fixed component and interest on new borrowings  necessary  for  Government's  fiscal  operations  in  a  particular  financial  year,  which cannot  be  estimated  precisely  as  it  may  vary  depending  upon  quantum/composition/timing  of new  borrowings,  prevailing  interest  rate  etc.  Even,  the  fixed  component  of  interest  incidental may  be  impacted  by  the  Government's  decision  to  switch/buyback/premature  redemption  etc. The  details  of  fixed  component  of  interest  incidental  on  the  basis  of  Central  Government's outstanding  debt/liabilities  as  on  July  25,  2022,  in  the  next  five  financial  years  is  given  in Annexure-III.

(d) In FY 2020-21, the Central Government debt/liabilities increased by more than 9 percentage points  of  GDP  in  a  single  year  mainly  on  account  of  COVID-19  global  pandemic.  The Government has announced its commitment to reduce fiscal deficit to the level below 4.5% of GDP by  FY 2025-26.  Increasing  the  buoyancy  of  tax  revenue  through  improved  compliance, mobilisation of resources through monetisation of assets, improving efficiency and effectiveness of public expenditure etc. are the important measures initiated by the Government to reduce the fiscal deficit and the debt.

(e&f) In the statement explaining reasons for deviation from the fiscal targets provided under the Fiscal  Responsibility  and  Budget  Management  Act,  2003,  laid  before  Parliament  along  with Union  Budget  2022-23,  the  Government  has  stated  that  while  India's  economic  foundations remain  strong,  it  is  vital  for  the  Government  to  retain  requisite  fiscal  flexibility  to  effectively respond to emerging contingencies till the pandemic-induced uncertainties ease. In line with the commitment made in the budget for FY 2021-22, the Government is committed to achieve fiscal consolidation to attain a level of fiscal deficit lower than 4.5 per cent of GDP by FY 2025-26.

*****

## The details of debt to GDP ratio during the last five years:

Annexure-II The details  of  the  yearly  interest  burden  of  the  Government  during  the  last  five  years  and

| Financial Year   | (% of GDP)   |
|------------------|--------------|
| 2017-18          | 48.5%        |
| 2018-19          | 49.0%        |
| 2019-20          | 52.4%        |
| 2020-21          | 61.6%        |
| 2021-22 (Prov.)  | 58.7%        |

## budget estimates (BE) for current financial year are as under:

Annexure-III The  details  of  fixed  component  of  interest  incidental  on  basis  of  Central  Government

| Financial Year   |   (Rs. in lakh crore) |
|------------------|-----------------------|
| 2017-18          |                  5.29 |
| 2018-19          |                  5.83 |
| 2019-20          |                  6.12 |
| 2020-21          |                  6.8  |
| 2021-22(Prov.)   |                  8.05 |
| 2022-23 (BE)     |                  9.41 |

outstanding debt/liabilities as on July 25, 2022, in the next five financial years are as under:

| Financial Year   |   (Rs. in lakh crore) |
|------------------|-----------------------|
| 2023-24          |                  8.31 |
| 2024-25          |                  7.98 |
| 2025-26          |                  7.65 |
| 2026-27          |                  7.34 |
| 2027-28          |                  6.76 |

Note: The above estimate does not include the variable interest component which depends upon quantum/composition/timing of new borrowings, prevailing interest rate etc., during the respective financial year.

Annexure-I