Don’t misconstrue IMF’s debt outlook, says Centre
The Hindu
After IMF says India’s debt could hit 100% of GDP by 2028, Finance Ministry says ‘worst-case scenario’ not based on factual position
The Union Finance Ministry on Friday sought to dispel “certain” factually incorrect “presumptions” being made about India’s indebtedness levels from a scenario-based assessment by the International Monetary Fund (IMF) that warned government debt could hit 100% of GDP by 2027-28 under adverse circumstances.
“In the light of the IMF’s latest Article IV consultations with India, certain presumptions have been made taking into account possible scenarios that does not reflect factual position,” the Ministry said.
Noting that similar IMF reports for other countries show much higher extreme scenarios for them, the Ministry stressed that any interpretation that the report implies that general government debt would exceed 100% is misconstrued.
Stressing that its statement is not a critique of the IMF’s assessment, the Ministry said this was a clarification of factual position and not a “rebuttal” to the IMF, but “rather an effort to arrest misinterpretation/misuse of the comments in the IMF document”.
General government debt includes debt of both the Centre and the States, and had dipped “steeply” from about 88% in 2020-21 to about 81% in 2022-23, the Ministry said, sharing a cross-country comparison on debt levels to assert that “India has done relatively well and is still below the debt level of 2002”.
The IMF’s Executive Board said on Monday it had concluded its annual consultation with India, and its Directors had recommended “ambitious medium-term consolidation efforts given elevated public debt levels and contingent liability risks”.
“While the budget deficit has eased, public debt remains elevated and fiscal buffers need to be rebuilt”, the IMF said, adding that the Board encouraged “authorities to put in place a sound medium-term fiscal framework to promote transparency and accountability and align policies with India’s development goals”.