India's Rising Debt Crosses 80% of GDP, Prompting Calls for Fiscal Consolidation
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Government debt has risen sharply in recent years, crossing 80% of GDP currently due to COVID-19 impact and infrastructure spending
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High debt levels result in greater interest payments, reducing fiscal room for expenditures
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The Fiscal Responsibility and Budget Management (FRBM) Act aimed to reduce debt to 60% of GDP by 2024-25, but targets have been missed
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Options to cut debt include fiscal consolidation to limit deficits, higher GDP growth to raise denominator, and inflation to erode real value of debt
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A blend of fiscal consolidation and strong economic growth needed to bring down debt from current elevated levels