NEW DELHI: The economic turbulence due to Covid-19 is expected to push India's debt-to-GDP ratio higher, according to a SBI Ecowrap report on Monday. Together with the declining GDP growth, debt-to-GDP ratio has been adversely affected in all countries.
"India's debt-to-GDP ratio has increased gradually from Rs 58.8 lakh crore (67.4 per cent of GDP) in FY12 to Rs 146.9 lakh crore (72.2 per cent of GDP) in FY20," it said. Higher borrowing this fiscal was likely to increase the gross debt to around Rs 170 lakh crore (87.6 per cent of GDP), it added. According to the report, external debt is estimated to increase to Rs 6.8 lakh crore (3.5 per cent of GDP) in the expected gross debt for FY21.
"Of the remaining domestic debt, component of state's debt is expected at 27 per cent of GDP. Interestingly, the GDP collapse is pushing up the debt-to-GDP ratio by at least 4 per cent, implying that growth rather than continued fiscal conservatism is the only mantra to get us back on track," it said.
"We reiterate the current thinking of rating downgrade in policy circles is a false negative as India's rating is likely to face a litmus test of downgrade in FY21, depending on what we have done to bring growth back to track," the SBI Ecowrap report said. (IANS)
Also Watch: Teacher of Kardoiguri area of Moran spends his earnings to build bamboo bridge for the village