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Informist, Thursday, Dec. 12, 2024

 

--World Bank Chief Economist Gill: India public debt reaching worrying level 

--CONTEXT: World Bank Chief Economist Indermit Gill speaking at CII event 

--World Bk's Gill: Entire G20, including India, behind rising protectionism

--MoSPI official: Not looking to drop release of GDP second advance estimate

NEW DELHI - India, which is making an attempt to escape the middle income trap, has public debt that "is getting to a worrying level", World Bank's Chief Economist Indermit Gill said Thursday. However, its "private debt (levels) are not (worrying)", he said at the Confederation of Indian Industry's Global Economic Policy Forum 2024.

 

Gill's comments on India's worrying public debt level comes at a time when the government seems to have taken cognisance of the matter, with Finance Minister Nirmala Sitharaman saying only a day before that sustainable debt management will be a priority in the coming decade. 

The Indian government's market borrowing has doubled to INR 14.01 trillion on a gross basis in the current financial year from the pre-pandemic level of INR 7.1 trillion in 2019-20 (Apr-Mar).

 
To address this high debt level, the government in its latest Budget for FY25, announced targeting the debt-to-GDP ratio from FY26 onwards in order to lower the debt stock and keep the interest burden in check. 

The Union Budget for FY25 pegged the government's interest expense for the current fiscal at INR 11.63 trillion against a capital expenditure of INR 11.11 trillion. Gill said that a middle income country like India already struggles with capital requirements. In that context, funds going into servicing debt will be an ineffective way of using capital, he said.

Gill said that middle income countries currently have to deal with rising headwinds like household debts, fragmentation and conflict. He, however, noted that when it comes to fragmentation, it is not just trade disruptions that come into play but also rising protectionism. 

All G20 nations, which include India, Gill said, were responsible for this protectionism. "Richer economies are now more protectionist, and that has resulted in countries like India and other nations also becoming more protectionist," he said. 

In the recent past, after US President-elect Donald Trump's 100% tariff threats to Chinese imports, many experts have sounded caution against risks to India from a reshaping of global trade ties amid dampening demand. Gill, however, said that "United States is not the only culprit" and that it is also India, China, Brazil, European Union, and a few others. 

 

In this context, India's Chief Economic Adviser V. Anantha Nageswaran said earlier in the day that while India has benefitted from the world economy opening up, giving impetus to Indian exports, it is now time to double down on domestic efforts to strengthen manufacturing and private capital formation to drive the India growth story. 

These comments by top economists come at a time when the Indian economy expanded much lower than anticipated in Jul-Sept because of substantial deceleration in industrial growth.

 

Speaking about data, Ministry of Statistics and Programme Implementation Secretary Saurabh Garg, who was also present at the event, said that the government was working on anonymised goods and services tax data on a real-time basis to keep track of sale of products and services being taken, in order to better gauge momentum in the economy. "It will help us track the health of the economy on a more timely basis," he said. 

 

On the data and periodic releases of it, a statistics ministry official said that currently there were no considerations to drop the second advanced estimate of GDP. After the ministry discontinued the release of the third revised estimate of GDP data in February, there were speculations that the government may limit GDP data releases to four, from the current five.  End

Reported by Priyasmita Dutta

Edited by Akul Nishant Akhoury

 

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