COVID-19 impact | India's debt-to-GDP ratio increases to 90%: IMF

The International Monetary Fund recently announced that debt to GDP ratio of India increased from 74% to 90% due to the COVID-19 crisis. It will increase to 99% in 2021. The International Monetary Fund has also said that it will come down to 80% after the economic recovery.

What is GDP Debt Ratio?

When the GDP Debt ratio is low, it indicates that the country produces and sells goods and services that are sufficient to pay back all the further debts. India's GDP ratio has remained 70% since 1991. The current increase is mainly due to the COVID-19 crisis.

GDP Debt Ratio of Other Countries

• At the end of the third quarter of 2020, the US had a debt to GDP ratio of 3%.
  
  
• During the same period, it had Japan's debt ratio of 1% and China's debt ratio of 46.7%.

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What is Public Debt?

Public debt in India is the total liability of the central government that must be repaid from the Consolidated Fund of India. About one-quarter of government spending goes to interest payments.

Public Debt Management Agency

It was established in 2016 by the Ministry of Finance. Public debt management agency streamlines government borrowings and helps in achieving better cash management. It was an interim arrangement by RBI. However, it was conferred a separate statutory status from the RBI.

PDMA has planned government borrowing. It manages the liabilities of the government. It monitors the cash balance and improves cash forecasting.

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