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Finance Minister Nirmala Sitharaman has emphasized the robust risk profile of India's government debt, stating that it stands out as safe and prudent despite challenges posed by the Covid-19 pandemic.

 

In a series of posts on social media platform X, Sitharaman highlighted key aspects of India's fiscal management and compared it favorably to previous administrations.

 

"India's government debt maintains a safe and prudent risk profile," Sitharaman said, underlining the Modi-led government's effective fiscal management in the face of unprecedented challenges.

 

Sitharaman raised concerns over comparisons made solely on absolute numbers without considering the GDP growth, which forms the basis of debt calculations. "Many times absolute numbers have been compared without considering the GDP growth on which the debt calculations are based," she stated.

 

Questioning the fiscal viability of opposition promises, Sitharaman pointedly asked about the cost implications of schemes proposed by the Congress party. "Will they borrow substantially for them, or will they raise taxes to fund them?" she queried, challenging the feasibility of the proposed 'Khata Khat' schemes.

 

Highlighting the comparative debt-to-GDP ratios, Sitharaman underscored India's favorable position. "India had a debt-to-GDP ratio of 81% in 2022, significantly lower than economies like Japan, Italy, the USA, France, and the UK in the same period," she noted.

 

Sitharaman also shed light on the composition of India's debt, emphasizing its predominantly rupee-denominated nature. "Central government debt is overwhelmingly rupee-denominated, with external borrowings contributing a minimal amount," she stated, indicating a lower exposure to exchange rate volatility.

 

While acknowledging the fiscal challenges posed by the Covid-19 pandemic, Sitharaman highlighted the government's proactive measures to protect lives and livelihoods. "Post-pandemic, the Modi-led government pursued a balanced approach to fiscal consolidation while sustaining economic growth," she said, citing a reduction in the fiscal deficit from 9.2% of GDP in 2020-21 to 5.8% in the Revised Estimates for FY24.