Finance Minister Nirmala Sitaman said on Monday that India is doing well compared to other countries in terms of government debt to GDP ratio and is the third least indebted country. between small and medium-sized countries. By 2022, India’s debt to GDP ratio will reach 81%. England (101.9%). On the other hand, many countries have faced the problem of debt default in recent years. He said the number of countries facing high debt levels rose from 22 in 2011 to nearly 60 in 2022.
The Finance Minister said that through comparative analysis with other small and medium-sized countries, India’s external debt position is strong. Considering the ratio of total external debt to gross national income (GNI), India is the third most indebted country among low- and middle-income countries. This is an important indicator of the country’s ability to manage foreign debt. India’s total external debt to export ratio is 91.9%, ranking fifth among the least developed and developing countries. India’s short-term debt is 18.7% of its total external debt. This proportion is smaller than other low and middle income countries such as China, Thailand, Turkey, Vietnam, South Africa and Bangladesh which have larger proportions, he added.
The portion of short-term debt is lower because there is less pressure to repay debt in the near term. Regarding central government debt, it is also important to note that the majority of the debt is in rupees, with a small contribution from external debt (from bilateral sources and many) (less than 5% of the total number), which means it is volatile. The exchange rate risk is lower. Domestic government debt will be raised through government bonds, with a weighted maturity of around 12 years and a low risk of rollover. This reflects the stability of central government debt. Therefore, the Indian government’s credit risk rating is safe and prudent as far as the parameters of the credit rating approach are concerned, it said. India’s government foreign debt to GDP ratio (in 2020) is only 6.7%, Mexico 24.4%, Pakistan 28.6%, Indonesia 20.6%, and Turkey 15.8%.
The Finance Minister, who opposed the Congress-led UPA during the Lok Sabha election campaign, said that India’s external vulnerabilities have increased significantly during his tenure due to the high reliance on external trade credit (ECB). Between 2004-2014, the ECB posted a CAGR of 21.1%, and in the nine years from FY14 to FY23, the ECB has grown at 4.5%. “The UPA’s legacy of financial myopia and hidden debt is the opposite of an era of clarity, strategy and investment. “Under Prime Minister Narendra Modi’s government, we are building a legacy of growth, transparency and accountability,” he added.
