India’s central government debt is projected to escalate to ₹185.27 trillion, or 56.8% of GDP, by the financial year 2024-25 (FY25). This represents a significant increase from ₹93.26 trillion, or 49.3% of GDP, in 2018-19, according to the minister of state for finance Pankaj Chaudhary. The projected increase in debt reflects a combination of fiscal challenges and strategic economic policies implemented from FY19 to FY25. It highlights the government’s efforts to manage economic pressures while addressing critical public needs.
Increasing debt levels point to the government’s growing expenditures on public services, infrastructure projects, and economic stimulus measures. Rising debt often signifies a fiscal deficit, where government expenditures surpass its revenues. In FY20, the debt climbed to ₹105.07 trillion, accounting for 52.3% of GDP. This surge was primarily driven by higher spending on infrastructure and social schemes aimed at stimulating economic growth.
The COVID-19 pandemic exacerbated the situation, pushing the debt to ₹121.86 trillion, or 61.4% of GDP, in FY21. The government responded to the economic fallout from the pandemic by resorting to extensive borrowing to fund relief measures and stimulus packages. As the country embarked on recovery efforts post-pandemic, debt levels continued to climb, reaching ₹138.66 trillion, or 58.8% of GDP, in FY22. This slight reduction in the debt-to-GDP ratio was attributed to a rebound in economic activity, although the absolute debt figure continued its upward trajectory.
Financial year 2022-23 saw the debt increase further to ₹156.13 trillion, or 57.9% of GDP. The government’s focus remained on economic recovery, infrastructure development, and welfare programs, necessitating continued borrowing. For FY24, provisional figures indicate that the debt has reached ₹171.78 trillion, or 58.2% of GDP. This reflects the ongoing efforts to stabilize the economy and invest in growth-oriented projects.
Looking ahead, the budget estimates for FY25 forecast the debt to rise to ₹185.27 trillion, or 56.8% of GDP. This projection aligns with the government’s plans to sustain economic growth while managing fiscal deficits. According to the International Monetary Fund’s World Economic Outlook for April 2024, India’s GDP reached $3.57 trillion in 2023-24. This substantial economic activity underscores India’s growing role as a significant player in the global economy.
