IMF alerts India about rising debt

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IMF alerts India about rising debt

| Updated: December 22, 2023 16:08

IMF

The International Monetary Fund (IMF) has warned that India’s general government debt could exceed 100% of the gross domestic product (GDP) in the medium term.

The report, published by Business Standard and alluded to by WION, has pointed to the annual Article IV consultation report. It underscores the importance of more private sector investment, fresh funding, and climate-resilience initiatives.

The IMF notes that substantial investment could improve India’s capacity to withstand climate stresses and natural disasters.

The Indian government has emphasised that sovereign debt risks, by virtue of primarily denominated in domestic currency, have limitations.

Meanwhile, KV Subramanian, India’s executive director at the IMF, contested IMF’s claim, saying that despite historical shocks, India’s public debt-to-GDP ratio has been generally consistent.

Regardless of the debt concerns, the IMF remains positive about India’s economy in its Article IV report, as it highlights the country’s prospects for growth if key structural reforms are put in place.

The report outlines the need for fiscal consolidation to cut down on public debt. It also highlights the challenges like global growth slowdown, commodity price volatility, and domestic weather shocks, according to the article in WION.

The Economic Times had earlier reported Fitch, S&P, and Moody’s, have given India the lowest investment-grade rating, concerned over lukewarm fiscal performance, unsettling debt stock, and low GDP per capita.

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