In response to the International Monetary Fund’s (IMF) recent forecast that India’s general debt could surpass 100% of its GDP by fiscal 2028, the Union finance ministry has categorically dismissed the warning. The ministry contends that the IMF’s projections represent a worst-case scenario and should not be interpreted as an unavoidable outcome.
Outlined in the annual Article IV review, the IMF’s prediction suggests that under adverse circumstances, India’s debt-to-GDP ratio might breach 100% by the fiscal year 2027-28. However, the finance ministry pointed out that the comparative debt situations of the US, the UK, and China, standing at 160%, 140%, and 200% respectively under similar worst-case conditions, are significantly more precarious than India’s projected 100%.
Emphasizing India’s fiscal strength, the ministry highlighted that the country’s general debt is predominantly denominated in rupees, with minimal external borrowings. Furthermore, the government underscored a positive trend, noting that the general government debt, inclusive of both states and the Centre, has decreased from 88% in the 2020-21 fiscal year to 81% in the 2022-23 financial year.
