Central Government Debt Set To Double To ₹185 Trillion By FY25 Amid Fiscal Challenges And Policy Shifts

7/29/2024 7:00:22 AM

(MENAFN- Live Mint) India's central government debt is projected to escalate to ₹185.27 trillion, or 56.8% of GDP, by the financial year 2024-25 (FY25), up from ₹93.26 trillion, or 49.3% of GDP, in 2018-19, the Minister of state for finance Pankaj Chaudhary said in a written reply to the Lok Sabha on Monday.

This projected increase in debt follows a significant rise over the past six years, reflecting a combination of fiscal challenges and strategic economic policies from FY19 to FY25. It underscores the government's efforts to manage economic pressures while addressing critical public needs.

Increasing debt levels highlight the government's growing expenditures on public services, infrastructure projects, and economic stimulus measures. Rising debt often signals a fiscal deficit, where the government's expenditures exceed its revenues.

In FY20, the debt increased to ₹105.07 trillion, accounting for 52.3% of GDP, as Chaudhary told the Lok Sabha in response to a question from Khalilur Rahaman, Trinamool Congress member.

This increase was largely driven by higher spending on infrastructure and social schemes aimed at stimulating economic growth. The onset of the pandemic exacerbated the situation, pushing the debt to ₹121.86 trillion, or 61.4% of GDP, in FY21. The government resorted to extensive borrowing to fund relief measures and stimulus packages, a necessary response to the economic fallout from the pandemic.

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As the country embarked on recovery efforts post-pandemic, debt levels continued to climb, reaching ₹138.66 trillion, or 58.8% of GDP, in FY22. This slight reduction in the debt-to-GDP ratio was due to a rebound in economic activity, though the absolute debt figure continued its upward trajectory.

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