India’s public debt ratio, which remarkably remained stable at about 70% of the GDP since 1991, is projected to jump by 17 percentage points to almost 90% because of an increase in public spending due to COVID-19, the IMF said.
“In our projections, the increase in public spending, in response to COVID-19, and the fall in tax revenue and economic activity, will make public debt jump by 17 percentage points to almost 90% of GDP,” Vitor Gaspar, Director of IMF’s Fiscal Affairs Department, told the Press Trust of India.
“Going forward, it is projected to stabilise in 2021, before slowly declining up to the end of the projection period, in 2025. Broadly speaking, the pattern of public debt in India is close to the norm around the world,” he said.
According to Mr. Gaspar, in the near-term, additional fiscal action can and should be deployed as needed to support the poor and the vulnerable.