India using ‘right policies’ to lower high debt level, says IMF

RSTV Bureau

imfIndia has quite a high Debt to GDP ratio, but New Delhi is trying to lower it using “the right policies”, the International Monetary Fund has said. The IMF also told that the global debt reached a record high in 2016 at USD 164 trillion, or almost 225 per cent of GDP.

India’s general government debt remained relatively high, at 70 per cent of the GDP in 2017, Abdel Senhadji, Deputy Director, IMF Fiscal Affairs Department, told reporters at a news conference in Washington on Wednesday.

“The debt level is relatively high (in India), but the authorities are planning to bring it down over the medium term with the right policies,” Senhadji said.

In fiscal year 2017-18, India is planning to continue with the consolidation in the current fiscal year and over the medium term, the top IMF official said.

“They are, in fact, targeting their federal deficit of three percent over the medium term, and they are targeting also a debt ratio of 40 per cent over the medium term at the federal level, which corresponds to about 60 per cent at the general government level. And we believe that those targets are appropriate,” the IMF official said.

The global debt reached a record high in 2016 at USD 164 trillion, or almost 225 per cent of GDP, Vitor Gaspar, Director, IMF Fiscal Affairs Department said, noting that most of the debt is in advanced economies although in the last 10 years, emerging market economies have been responsible for most of the increase.

China alone has contributed 43 per cent to the increase since 2007.

“Public debt is currently at historic highs in advanced and emerging market economies. Average debt-to-GDP ratios, at more than 105 per cent of GDP in advanced economies, are at levels not seen since World War II,” Gasper told reporters at a news conference here.

“Countries are advised to avoid procyclical fiscal policies that exacerbate economic fluctuations and ratchet up public debt,” he said.

(With inputs from Agencies)