Centre's Debt Burden Hits Rs 146 Lakh Cr In Q3

The central government's total debt increased 2.6 per cent from the previous quarter to Rs 146.36 lakh crore in the December quarter of the current fiscal year, according to data released by the finance ministry on Tuesday.

Internal debt increased 2.1 per cent to Rs 125.24 crore in December 2022 from the previous quarter, while foreign debt increased 6.1 per cent to Rs 9.17 lakh crore. According to the data, the centre's other liabilities increased by 5 per cent during this time span to Rs 11.96 lakh crore.

As of the end of December, public debt, which included both internal and foreign debt, accounted for 91.8 per cent of the Centre's total debt, a marginal decrease from 92 per cent at the end of September last year. Market loans made for 71 per cent of the Centre's internal debt, totalling Rs 88.69 lakh crore, according to the data.

To allay concerns about rising debt levels, Finance Minister Nirmala Sitharaman recently stated that the federal government's external debt will account for only 2.6 per cent of GDP by 31 March 2023. “Most external debt is financed at low-interest rates by multilateral and bilateral agencies. As a result, the risk profile stands out as secure and prudent,” Sitharaman said in a written response to a question in the Lok Sabha.

Global rating agencies have frequently highlighted India's “weak public finances,” as evidenced by high deficits and debt relative to peers, despite the country's robust development outlook and still-resilient external finances.

Naturally, the large pandemic stimulus and the economic contraction increased the total Centre and state debt-to-GDP ratio to 89.2 per cent in FY21 from 75.1 per cent in FY20. However, the International Monetary Fund predicts that the ratio will rise to 83.5 per cent of GDP in FY23 and then steadily decline from FY26 onwards.