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Debt is directly linked to the fiscal deficit, which is further financed by different kind of loans.
Dipu Rai
New Delhi
July 3, 2019
UPDATED: July 3, 2019 22:09 IST
Photo for representation
From common man to the state, managing the income and expenditure is always a daunting task, and any miscalculation may lead to debt trap as India's centre and state governments are likely to face. Center and states governments have borrowed more than 300 per cent of their revenue to fill this gap, rating agency data shows.
"In FY19, India's general government's (both central and state) fiscal deficit at 6.9% of GDP was much higher than the Fitch-rated 'BBB' peer group's median of 1.9%,"said Dr Sunil Kumar Sinha, Principal Economist, India Ratings and Research, owned by Fitch Ratings said in its latest research note.
Debt is directly linked to the fiscal deficit, which is further financed by different kind of loans.
As a representative of the central government, Finance minister Nirmala Sitharaman is trying to manage the part of debt as fiscal deficit control in her maiden July 5 Budget.
India's general government debt level is at 69 per cent of the GDP in FY19. General Government Debt worked out to be 68.2 per cent of GDP in 2018, a marginal increase over the 2017 level of 67.5 per cent.
Data shows that from 2013 to 2017 the general government debt at 341.4 per cent of its revenue but in 2018 has seen a nominal decline to 329.1 per cent. This pause in the declining trend is because of low inflation. Lower inflation may cut the cost of fresh borrowings in 2019-20 too.
General government debt is debt level of the government sector (Central and State Governments) and is counted as consolidated liabilities of the Central Government and the State Governments, netting out inter-governmental transactions.
If we compare this general government Debt to GDP ratio, it is about 69 per cent in the financial year 2019, higher than 68.6% at end March 2016 and significantly lower than historical high at 83.3% in 2003-04.
Center's government debt has accounted for 44.5 per cent of the GDP in Mar 2019 against 45.6 per cent in the previous year. This ratio reached an all-time high of 61.6 per cent in Mar 2003.
Government is primarily depending on market-linked borrowings for financing its fiscal deficit. Similarly, the significant sources of financing of the gross fiscal deficit (GFD) of the State Governments are market borrowings, loans from financial institutions and the Centre.
State Governments also incur liabilities in the public account through provident funds, reserve funds, deposits. The Debt in the form of GFD financing surged from an average of 48.5 per cent during 2005-2010 to 66.8 per cent during 2010-2016. The state debt level further increased to 74.9 per cent of GFD in 2017-18 followed by 90.6 per cent of GFD in 2018-19.
However, many developed economies have a debt/GDP ratio much higher than that of India. However, due to a smaller revenue base, India's debt/revenue ratio is much higher than that of other 'BBB' rated economies. This makes India's growth cycle highly vulnerable, and it is an outlier even among 'BBB' category economies, as rating agency explained.
However, total general Government liabilities, as per cent of GDP, have moved in a narrow range during 2011-12 to 2017-18.
Directly or indirectly, the level of general government debt will shape the budget 2019. That is why fiscal deficit management will be at the centre of the budget.
https://www.indiatoday.in/diu/story...ll-the-budget-address-this-1561504-2019-07-03
Dipu Rai
New Delhi
July 3, 2019
UPDATED: July 3, 2019 22:09 IST
Photo for representation
From common man to the state, managing the income and expenditure is always a daunting task, and any miscalculation may lead to debt trap as India's centre and state governments are likely to face. Center and states governments have borrowed more than 300 per cent of their revenue to fill this gap, rating agency data shows.
"In FY19, India's general government's (both central and state) fiscal deficit at 6.9% of GDP was much higher than the Fitch-rated 'BBB' peer group's median of 1.9%,"said Dr Sunil Kumar Sinha, Principal Economist, India Ratings and Research, owned by Fitch Ratings said in its latest research note.
Debt is directly linked to the fiscal deficit, which is further financed by different kind of loans.
As a representative of the central government, Finance minister Nirmala Sitharaman is trying to manage the part of debt as fiscal deficit control in her maiden July 5 Budget.
India's general government debt level is at 69 per cent of the GDP in FY19. General Government Debt worked out to be 68.2 per cent of GDP in 2018, a marginal increase over the 2017 level of 67.5 per cent.
Data shows that from 2013 to 2017 the general government debt at 341.4 per cent of its revenue but in 2018 has seen a nominal decline to 329.1 per cent. This pause in the declining trend is because of low inflation. Lower inflation may cut the cost of fresh borrowings in 2019-20 too.
General government debt is debt level of the government sector (Central and State Governments) and is counted as consolidated liabilities of the Central Government and the State Governments, netting out inter-governmental transactions.
If we compare this general government Debt to GDP ratio, it is about 69 per cent in the financial year 2019, higher than 68.6% at end March 2016 and significantly lower than historical high at 83.3% in 2003-04.
Center's government debt has accounted for 44.5 per cent of the GDP in Mar 2019 against 45.6 per cent in the previous year. This ratio reached an all-time high of 61.6 per cent in Mar 2003.
Government is primarily depending on market-linked borrowings for financing its fiscal deficit. Similarly, the significant sources of financing of the gross fiscal deficit (GFD) of the State Governments are market borrowings, loans from financial institutions and the Centre.
State Governments also incur liabilities in the public account through provident funds, reserve funds, deposits. The Debt in the form of GFD financing surged from an average of 48.5 per cent during 2005-2010 to 66.8 per cent during 2010-2016. The state debt level further increased to 74.9 per cent of GFD in 2017-18 followed by 90.6 per cent of GFD in 2018-19.
However, many developed economies have a debt/GDP ratio much higher than that of India. However, due to a smaller revenue base, India's debt/revenue ratio is much higher than that of other 'BBB' rated economies. This makes India's growth cycle highly vulnerable, and it is an outlier even among 'BBB' category economies, as rating agency explained.
However, total general Government liabilities, as per cent of GDP, have moved in a narrow range during 2011-12 to 2017-18.
Directly or indirectly, the level of general government debt will shape the budget 2019. That is why fiscal deficit management will be at the centre of the budget.
https://www.indiatoday.in/diu/story...ll-the-budget-address-this-1561504-2019-07-03
) or claming to be a supppaaa pooowwaaaa!!!
