India must reduce its public debt ratio to build economic resilience
SummaryThis effort should be led by the Centre crunching its primary deficit as we can’t count on automatic debt-reducing dynamics
The new Union budget presented by finance minister Nirmala Sitharaman last week has a credible plan to further reduce the fiscal deficit as a proportion of India’s gross domestic product (GDP). However, one uncomfortable fact did not get enough attention in its immediate aftermath. The ratio of public debt to GDP is expected to increase over the next financial year, despite this fiscal correction.