The Centre responded to the International Monetary Fund's (IMF) cautionary statements regarding alleged vulnerabilities in India's government debt, asserting that certain assumptions made by the IMF do not accurately reflect the factual position. The finance ministry emphasized key points, particularly highlighting that a majority of India's general government debt, encompassing both the Centre and states, is denominated in rupees, with external borrowings constituting only a small portion. This, the ministry argued, results in a low rollover risk for domestic debt.

During the IMF's Article IV consultations with India, concerns were raised about the potential for the country's general government debt to reach 100% of the debt-to-GDP ratio by FY 2028 under adverse shocks. The finance ministry clarified that this extreme scenario was presented as a "once-in-a-century Covid-19" type event and was listed among various favorable and unfavorable scenarios. It stressed that this extreme possibility is not a predetermined outcome.

Comparing India to other nations, the finance ministry pointed out that the IMF's extreme scenarios for them were higher, such as 160% for the US, 140% for the UK, and 200% for China. The ministry highlighted that, according to the IMF report, India's General Government Debt to GDP ratio could decline to below 70% under favorable circumstances in the same period.

Acknowledging global economic shocks like Covid-19 and the Russia-Ukraine war, the finance ministry commended India's relatively resilient performance and noted that the country's current debt level is still below that of 2002. It emphasized the significant reduction in general government debt from approximately 88% in FY 2020-21 to about 81% in 2022-23. The ministry asserted that the Centre is on track to achieve its fiscal consolidation target, aiming to reduce the fiscal deficit to below 4.5% of GDP by FY 2025-26.

For a more structured presentation, the following table summarizes key points:

The Centre responded to the International Monetary Fund's (IMF) cautionary statements regarding alleged vulnerabilities in India's government debt, asserting that certain assumptions made by the IMF do not accurately reflect the factual position. The finance ministry emphasized key points, particularly highlighting that a majority of India's general government debt, encompassing both the Centre and states, is denominated in rupees, with external borrowings constituting only a small portion. This, the ministry argued, results in a low rollover risk for domestic debt.

During the IMF's Article IV consultations with India, concerns were raised about the potential for the country's general government debt to reach 100% of the debt-to-GDP ratio by FY 2028 under adverse shocks. The finance ministry clarified that this extreme scenario was presented as a "once-in-a-century Covid-19" type event and was listed among various favorable and unfavorable scenarios. It stressed that this extreme possibility is not a predetermined outcome.

Comparing India to other nations, the finance ministry pointed out that the IMF's extreme scenarios for them were higher, such as 160% for the US, 140% for the UK, and 200% for China. The ministry highlighted that, according to the IMF report, India's General Government Debt to GDP ratio could decline to below 70% under favorable circumstances in the same period.

Acknowledging global economic shocks like Covid-19 and the Russia-Ukraine war, the finance ministry commended India's relatively resilient performance and noted that the country's current debt level is still below that of 2002. It emphasized the significant reduction in general government debt from approximately 88% in FY 2020-21 to about 81% in 2022-23. The ministry asserted that the Centre is on track to achieve its fiscal consolidation target, aiming to reduce the fiscal deficit to below 4.5% of GDP by FY 2025-26.

For a more structured presentation, the following table summarizes key points: