‘Still below debt level of 2002,’ India terms IMF’s latest report ‘misconstrued’

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India has said that certain projections made by the International Monetary Fund on alleged government debt vulnerabilities do not reflect the factual position adding that it has done relatively well and is still below the debt level of 2002.

The IMF in one of its latest reports projected that the general government debt will exceed 100 per cent of the country’s GDP by 2027-28 but the government termed it ‘misconstrued’.

India further said that several other countries are expected to perform worse.

“It is also noteworthy that the same report indicates that under favourable circumstances, the general government debt to GDP ratio may decline to below 70 per cent in the same period.

“Therefore, any interpretation that the report implies that general government debt would exceed 100 per cent of GDP in the medium term is misconstrued,” the ministry said in its rebuttal to the IMF report following the annual Article IV consultation with Indian authorities.

For instance, the corresponding figures of ‘worst-case’ scenarios for the USA, UK and China are about 160, 140, and 200 per cent, respectively, which is far worse compared to 100 per cent for India, the statement said.

“The states have also individually enacted their fiscal responsibility legislation, which is monitored by their respective state legislatures.

“Therefore, it is expected that the general government debt will decline substantially in the medium to long term,” it said.

As per Article IV consultation report by the IMF earlier this week, while the budget deficit has eased, public debt remains elevated and fiscal buffers need to be rebuilt.

IMF reviews a country’s current and medium-term economic policies and outlook.

With inputs from PTI

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