{"id":115232,"date":"2021-06-28T18:32:57","date_gmt":"2021-06-28T13:02:57","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=115232"},"modified":"2021-06-29T11:48:51","modified_gmt":"2021-06-29T06:18:51","slug":"indias-debt-to-gdp-ratio-at-a-14-year-high","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/indias-debt-to-gdp-ratio-at-a-14-year-high\/","title":{"rendered":"India\u2019s debt-to-GDP ratio at a 14-year high"},"content":{"rendered":"\n<p><b><span data-contrast=\"auto\">Relevance<\/span><\/b><span data-contrast=\"auto\">: Present situation of India\u2019s economy, dealing with a high debt burden and an increased Fiscal Deficit.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Synopsis<\/span><\/b><span data-contrast=\"auto\">: High Fiscal Deficit, a very high Debt-to-GDP ratio and a high amount of external debt have raised concerns over debt sustainability.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"30\" aria-setsize=\"-1\" data-aria-posinset=\"31\" data-aria-level=\"1\"><span data-contrast=\"auto\">Few concerns and possible solutions.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">Rise in Fiscal Deficit &amp; Debt-to-GDP ratio\u00a0<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"22\" aria-setsize=\"-1\" data-aria-posinset=\"32\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Fiscal Deficit =\u00a0<\/span><\/b><span data-contrast=\"auto\">9.3% of GDP from 4.6% (2020)<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"22\" aria-setsize=\"-1\" data-aria-posinset=\"33\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Debt-to-GDP ratio\u00a0<\/span><\/b><span data-contrast=\"auto\">= Risen to 58.73% from 51.6%<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">Why Fiscal Deficit (FD) is high?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">This was mainly due to the following reasons:\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" aria-setsize=\"-1\" data-aria-posinset=\"34\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Shortfall in revenue collection<\/span><\/b><span data-contrast=\"auto\">: Firstly, there has been a shortfall in revenue collection due to disruption in economic activities caused by the first wave of the pandemic.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"29\" aria-setsize=\"-1\" data-aria-posinset=\"35\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Accounting FCI\u2019s borrowing in calculation of FD<\/span><\/b><span data-contrast=\"auto\">: Secondly, government has made a slight change in its accounting practices. It is now including full borrowings of Food Corporation of India (FCI) in calculation of Fiscal Deficit.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">Food subsidy to FCI<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><b><span data-contrast=\"auto\">Earlier situation<\/span><\/b><span data-contrast=\"auto\">: Till last year, FCI\u2019s massive loans\u00a0<\/span><i><span data-contrast=\"auto\">(to finance distribution of subsidized ration)<\/span><\/i><span data-contrast=\"auto\">\u00a0were sourced from the\u00a0<\/span><b><span data-contrast=\"auto\">National Small Savings Fund (NSSF)<\/span><\/b><span data-contrast=\"auto\">. These borrowings were part of \u201cextra budgetary resources&#8221;, literally outside the budget. Hence, they did not reflect in the fiscal deficit.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"26\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><span data-contrast=\"auto\">This extra-budgetary borrowing was slammed by Comptroller and Auditor General (CAG) in 2019. Hence, government<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"26\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><span data-contrast=\"auto\">Extra Budgetary resources refers to allocations made from money outside of revenue or borrowings, through means such as the National Small Savings Fund (NSSF), and recapitalization bonds etc.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">Why FCI requires food subsidy?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">The difference between the cost of procurement of food-grains and the cost of providing them to fair price shops is what FCI demands from the government as a subsidy.\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"25\" aria-setsize=\"-1\" data-aria-posinset=\"3\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Subsidy Arrears<\/span><\/b><span data-contrast=\"auto\">: When the budget allocation for a financial year is not sufficient to clear all the dues of the food subsidies bill raised by FCI, the dues of such subsidies are carried over to the next financial year. Hence, to cover these arrears FCI used various methods like bonds, unsecured short-term loans and NSSF loans etc.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Present situation:<\/span><\/b><span data-contrast=\"auto\">\u00a0Now, government will make budgetary provisions for the repayment of entire FCI loans. Hence, these repayments shall be counted to calculate FD.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Impact of the change<\/span><\/b><span data-contrast=\"auto\">: Although, in both cases ultimately the burden of repayment shall lie with the government, but this change in accounting indicates transparency.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<h5><b><span data-contrast=\"auto\">Why Debt-to-GDP ratio is at an all-time high?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">The Union government&#8217;s debt has risen from 51.6% to\u00a0<\/span><b><span data-contrast=\"auto\">58.8%\u00a0<\/span><\/b><span data-contrast=\"auto\">of the gross domestic product in the fiscal year due to the following reasons:<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"21\" aria-setsize=\"-1\" data-aria-posinset=\"36\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">High amount of borrowing<\/span><\/b><span data-contrast=\"auto\">: Economic contraction forced the government to borrow a record amount to meet a revenue shortfall.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">Why India\u2019s external debt increased?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">The COVID-19 pandemic has led to an increase in debt not only for India but for most countries around the world.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"18\" aria-setsize=\"-1\" data-aria-posinset=\"37\" data-aria-level=\"1\"><span data-contrast=\"auto\">Most of the emerging economies have government debt that is around 40% to 50% of their GDP. Compared to that India\u2019s debt is around 75% to 80% of our GDP<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"18\" aria-setsize=\"-1\" data-aria-posinset=\"38\" data-aria-level=\"1\"><span data-contrast=\"auto\">Advanced countries like the US and Japan may have even higher debt levels. But India should not compare itself to these economies because their repayment capacity is also much higher than India.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"18\" aria-setsize=\"-1\" data-aria-posinset=\"39\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Constituents of external debt (in decreasing order)<\/span><\/b><span data-contrast=\"auto\">: Commercial borrowings (37%), Non-Resident Deposits (25%), Government borrowings (19%)<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">What is the problem with a large Fiscal Deficit, a high Debt-to-GDP ratio and a high external debt?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><span data-contrast=\"auto\">It means the government is saddled with a higher debt burden. This has the following impact:<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"23\" aria-setsize=\"-1\" data-aria-posinset=\"40\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Credit rating<\/span><\/b><span data-contrast=\"auto\">: This influences\u00a0<\/span><b><span data-contrast=\"auto\">sovereign credit worthiness ratings<\/span><\/b><span data-contrast=\"auto\">\u00a0assigned by global ratings agencies which tends to increase the government\u2019s borrowing costs<\/span><b><span data-contrast=\"auto\">.<\/span><\/b><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"23\" aria-setsize=\"-1\" data-aria-posinset=\"41\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Repayment issues under unforeseen circumstances<\/span><\/b><span data-contrast=\"auto\">: Borrowing more money means that you\u2019ll have to pay it back at some point of time. COVID has already led to a\u00a0<\/span><b><span data-contrast=\"auto\">high fiscal uncertainty<\/span><\/b><span data-contrast=\"auto\">\u00a0as per 15<\/span><span data-contrast=\"auto\">th<\/span><span data-contrast=\"auto\">\u00a0Finance Commission. Future unforeseen circumstances like another pandemic or a war in the near term, can lead to a subdued growth and then this debt will become a problem.<\/span><\/li>\n<\/ul>\n<h5><b><span data-contrast=\"auto\">What are the targets for FD and Debt-to-GDP ratio as per FRBM Act?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/h5>\n<p><span data-contrast=\"auto\">The Fiscal Responsibility and Budget Management (FRBM) Act, as amended in 2008, mandated the following:\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"19\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Fiscal Deficit target<\/span><\/b><span data-contrast=\"auto\">: Centre needs to limit fiscal deficit to 3% of the country&#8217;s gross domestic product (GDP) by March 31, 2021.\u00a0<\/span><b><span data-contrast=\"auto\">Note<\/span><\/b><span data-contrast=\"auto\">: FRBM Act includes has an option of an\u00a0<\/span><b><span data-contrast=\"auto\">escape clause\u00a0<\/span><\/b><span data-contrast=\"auto\">in situations of calamity and national security. In such situations, the government can deviate from its annual fiscal deficit target.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"o\" data-font=\"Courier New\" data-listid=\"19\" aria-setsize=\"-1\" data-aria-posinset=\"1\" data-aria-level=\"2\"><span data-contrast=\"auto\">In light of\u00a0COVID-induced uncertainty, government is now eyeing a Fiscal Deficit target of\u00a0<\/span><b><span data-contrast=\"auto\">6.8%\u00a0<\/span><\/b><span data-contrast=\"auto\">in 2021-22 and a gradual reduction to\u00a0<\/span><b><span data-contrast=\"auto\">4.6%\u00a0<\/span><\/b><span data-contrast=\"auto\">in 2025-26.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"19\" aria-setsize=\"-1\" data-aria-posinset=\"2\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Debt-to-GDP ratio:\u00a0<\/span><\/b><span data-contrast=\"auto\">Bringing down<\/span><b><span data-contrast=\"auto\">\u00a0<\/span><\/b><span data-contrast=\"auto\">the debt-to-GDP ratio of the\u00a0<\/span><b><span data-contrast=\"auto\">Centre<\/span><\/b><span data-contrast=\"auto\">\u00a0to\u00a0<\/span><b><span data-contrast=\"auto\">40%\u00a0<\/span><\/b><span data-contrast=\"auto\">and that of\u00a0<\/span><b><span data-contrast=\"auto\">states to 20%\u00a0<\/span><\/b><span data-contrast=\"auto\">by\u00a0<\/span><b><span data-contrast=\"auto\">2024-25<\/span><\/b><span data-contrast=\"auto\">.\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><b><span data-contrast=\"auto\">Note<\/span><\/b><span data-contrast=\"auto\">: Fifteenth Finance Commission (FFC) has recommended setting up an\u00a0<\/span><b><span data-contrast=\"auto\">FRBM review panel\u00a0<\/span><\/b><span data-contrast=\"auto\">to draft a new fiscal consolidation framework because the current challenges have made the\u00a0<\/span><b><span data-contrast=\"auto\">earlier targets impossible\u00a0<\/span><\/b><span data-contrast=\"auto\">to achieve.<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Is there a way out of this entire\u00a0situation? \/How can India tackle this problem of rising debt burden?<\/span><\/b><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<ul>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"42\" data-aria-level=\"1\"><span data-contrast=\"auto\">The FFC has recommended a\u00a0<\/span><b><span data-contrast=\"auto\">slow and gradual decline\u00a0<\/span><\/b><span data-contrast=\"auto\">in central government and general government debt to 56.6% and 85.7% (of GDP), respectively, by FY26.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"43\" data-aria-level=\"1\"><b><span data-contrast=\"auto\">Improved tax revenue<\/span><\/b><span data-contrast=\"auto\">\u00a0via increased compliance\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"44\" data-aria-level=\"1\"><span data-contrast=\"auto\">Increased receipts from monetization of assets, including public sector enterprises and land.<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"45\" data-aria-level=\"1\"><span data-contrast=\"auto\">Increase in capital expenditure via private investments\u00a0<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<li data-leveltext=\"\uf0b7\" data-font=\"Symbol\" data-listid=\"16\" aria-setsize=\"-1\" data-aria-posinset=\"46\" data-aria-level=\"1\"><span data-contrast=\"auto\">Higher fiscal stimulus to revive businesses, increase in employment\u00a0etc<\/span><span data-ccp-props=\"{&quot;134233279&quot;:true,&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/li>\n<\/ul>\n<p><span data-contrast=\"auto\">Terms to know:\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/forumias.com\/blog\/what-is-fiscal-deficit\/\"><span data-contrast=\"none\">Fiscal Deficit<\/span><\/a><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:720,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/forumias.com\/blog\/what-is-debt-to-gdp-ratio\/\"><span data-contrast=\"none\">Debt to GDP Ratio<\/span><\/a><span data-contrast=\"auto\">\u00a0<\/span><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:720,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><a href=\"https:\/\/forumias.com\/blog\/what-does-the-union-government-debt-include\/\"><span data-contrast=\"none\">What does the Union Government debt include?<\/span><\/a><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559685&quot;:720,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n<p><b><span data-contrast=\"auto\">Source<\/span><\/b><span data-contrast=\"auto\">:\u00a0Livemint\u00a0\u2013\u00a0<\/span><a href=\"https:\/\/www.livemint.com\/news\/india\/food-subsidy-bill-hits-record-high-of-5-trillion-in-202021-11624820503902.html\"><span data-contrast=\"none\">Article 1<\/span><\/a><span data-contrast=\"auto\">,\u00a0<\/span><a href=\"https:\/\/www.livemint.com\/economy\/debt-at-58-8-of-gdp-as-economy-shrinks-11624818421328.html\"><span data-contrast=\"none\">Article 2<\/span><\/a><span data-contrast=\"auto\">,\u00a0<\/span><a href=\"https:\/\/www.livemint.com\/news\/india\/numbers-in-focus-this-week-external-debt-capex-growth-euro-area-inflation-11624801357536.html\"><span data-contrast=\"none\">Article 3<\/span><\/a><span data-ccp-props=\"{&quot;335551550&quot;:6,&quot;335551620&quot;:6,&quot;335559740&quot;:276,&quot;469777462&quot;:[1183],&quot;469777927&quot;:[0],&quot;469777928&quot;:[1]}\">\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Present situation of India\u2019s economy, dealing with a high debt burden and an increased Fiscal Deficit.\u00a0 Synopsis: High Fiscal Deficit, a very high Debt-to-GDP ratio and a high amount of external debt have raised concerns over debt sustainability.\u00a0 Few concerns and possible solutions.\u00a0 Rise in Fiscal Deficit &amp; Debt-to-GDP ratio\u00a0\u00a0 Fiscal Deficit =\u00a09.3% of&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/indias-debt-to-gdp-ratio-at-a-14-year-high\/\">Continue reading <span class=\"screen-reader-text\">India\u2019s debt-to-GDP ratio at a 14-year high<\/span><\/a><\/p>\n","protected":false},"author":61,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,8043,9],"tags":[8282,8281,8283,8280,3140,8284],"class_list":["post-115232","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-current-affairs-cat","category-public","tag-credit-rating","tag-debt-burden","tag-debt-repayment","tag-debt-to-gdp-ratio","tag-fiscal-deficit","tag-nssf","entry"],"jetpack_featured_media_url":"","views":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115232","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/61"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=115232"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/115232\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=115232"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=115232"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=115232"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}