BackShare of public debt in GDP falls in India, but there’s little to celebrate
The primary reason is high nominal GDP growth which has been fuelled by rocketing inflation during these years
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India’s public debt as a percentage of economic output has come down by 17 percentage points in the last decade, according to IMF calculations. However, that is not entirely a cause for cheer. The primary reason for this number to come down is high nominal gross domestic product (GDP) growth which has been fuelled by rocketing inflation during these years.
Secondly, at around 61% of GDP, it is still higher than that of many peers in Asia and the BRICS grouping. Comparable middle-income countries which have a higher public debt to GDP ratio are mostly from Eastern Europe, as a result of the euro crisis. The high level of public debt is one more reason why recent efforts to take a more relaxed view of the fiscal deficit should be looked at with a jaundiced eye.
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