Washington: India’s debt and GDP ratio increased from 74 percent to 90 percent during the year Covid-19 The International Monetary Fund said it expects it to fall to 80 percent due to the country’s economic recovery.
Paolo Mauro, deputy director, IMF’s fiscal affairs department, told reporters at a news conference on Wednesday: ‘In the case of India, the debt ratio at the end of 2019, before the pandemic, was 74 per cent of gross domestic product (GDP) , and by the end of 2020 it is almost 90 percent of GDP. So this is a very big increase, but it is also something that other emerging markets and advanced economies are experiencing. ”
‘And in India’s forecast, we expect the debt ratio to decline gradually as the economy recovers. “In our base forecast under the assumption of healthy economic growth in the medium term, we see that debt will return to around 80 percent over time,” said Mauro.
When asked, he said the immediate priorities are to continue to support people and businesses, and to focus in particular on supporting the most vulnerable. At the same time, it is important to reassure the general public and investors that public finances are under control and the way to do so is through a credible medium-term fiscal framework.
“This year, India has already announced its budget. It remains accommodating. It still supports health, and it still supports people. In the next year, it is very likely that the deficit will be partially reduced as the economy recovers, ”he said. More common in emerging markets is the priority, given the very large increase in inequality, given the large increase in government debt, to mobilize income in the medium term, Mauro added.
Vitor Gaspar, director of the IMF’s fiscal affairs department, said that the growing deficits and contraction of economic activity, the debt increased sharply worldwide to 97 percent of GDP in 2020. It will increase more slowly in 2021 to 99 percent before it stabilize below, but close to 100 percent of GDP, he added.
In 2020, fiscal policy also contributed to mitigating declining economic activity and employment. It avoided falling on the scale of the Great Depression. Gaspar said countries with better access to finance, countries with stronger buffers, countries with stronger fundamentals were able to provide more fiscal support during 2020. They can sustain that fiscal support longer. , and they have more options in terms of policy making.
Source: Telangana Today