While internal debt rose 2.1% to Rs 125.24 crore as of December 2022 from the previous quarter, external debt totalled Rs 9.17 lakh crore, up 6.1%. The centre’s other liabilities grew 5% during this period to Rs 11.96 lakh crore, showed the data.
Public debt, comprising both internal and external debt, made up 91.8% of the Centre’s total debt as of end-December, marginally lower than 92% at the end of September last year. At Rs 88.69 lakh crore, market loans accounted for 71% of the Centre’s internal debt, the data showed.
Allaying concerns about elevated debt levels, finance minister Nirmala Sitharaman recently said the central government’s external debt will account for just 2.6% of gross domestic product (GDP) as of March 31, 2023. “External debt is mostly financed by multilateral and bilateral agencies at concessional rates. Therefore, the risk profile stands out as safe and prudent,” Sitharaman said in a written reply in the Lok Sabha.
Global rating agencies have often flagged India’s “weak public finances,” reflected in high deficits and debt relative to peers, even though they have conceded the country’s robust growth outlook compared to peers and still-resilient external finances.
Of course, the big pandemic stimulus and the contraction in the economy worsened the combined Centre and state debt-to-GDP ratio to 89.2% in FY21 from 75.1% in FY20. But the International Monetary Fund has forecast the ratio will improve to 83.5% of GDP in FY23 and gradually ease from FY26 onwards.
