The central government’s total debt rose 2.6% in the December quarter of the current fiscal year from the previous quarter to Rs 146.36 lakh crore, according to the finance ministry data released on Tuesday.
While internal debt rose 2.1% to Rs 125.24 crore as of December 2022 from the previous quarter, external debt totalled Rs 9.17 lakh crore, up 6.1%. The centre’s other liabilities grew 5% during this period to Rs 11.96 lakh crore, showed the data.
Public debt, comprising both internal and external debt, made up 91.8% of the Centre’s total debt as of end-December, marginally lower than 92% at the end of September last year. At Rs 88.69 lakh crore, market loans accounted for 71% of the Centre’s internal debt, the data showed.
Allaying concerns regarding elevated debt levels, finance minister Nirmala Sitharaman recently said the central government’s external debt will account for just 2.6% of gross domestic product (GDP) as of March 31, 2023. “External debt is mostly financed by multilateral and bilateral agencies at concessional rates. Therefore, the risk profile stands out as safe and prudent,” Sitharaman said in a written reply in the Lok Sabha.
Global rating agencies have often flagged India’s “weak public finances,” reflected in high deficits and debt relative to peers, even though they have conceded the country’s robust growth outlook compared to peers and still-resilient external finances.
Of course, the big pandemic stimulus and the contraction in the economy worsened the combined Centre and state debt-to-GDP ratio to 89.2% in FY21 from 75.1% in FY20. But the International Monetary Fund has forecast the ratio will improve to 83.5% of GDP in FY23 and gradually ease from FY26 onwards.
The Business Agenda 2026 has been developed and adopted in Kyrgyzstan. Ainura Usenbekova, Deputy Minister of Economy and Commerce of the Kyrgyz Republic, explained what tasks the state sets for itself in the development of the national economy.
“The business agenda of business accumulates a set of measures and initiatives of the state and the private sector aimed at the sustainable development of business, taking into account the ongoing changes in the world and in the region,” she says.
According to the Deputy Minister, almost all representatives of state bodies and business associations were involved in the development of the Agenda. Particular attention was paid to such factors as political and economic instability in the world and the countries of the region, which negatively affected the business and investment environment everywhere.
“These and other factors have become a signal for taking additional measures for the medium term in order to achieve the goals outlined in the National Development Program of the Kyrgyz Republic until 2026, as well as long-term goals outlined in the National Development Strategy of the Kyrgyz Republic until 2040,” Ainura said. Usenbekov.
According to the document, by 2026 the republic should achieve an annual economic growth of 5 percent, GDP per capita should be $1.5 thousand, and unemployment should drop to 5 percent. Ensuring the annual inflow of foreign direct investment is laid down in the amount of at least 13 percent of GDP. In addition, the authorities have taken care of environmental issues. In 2026, greenhouse gas emissions will be reduced by 44 percent, by 2050 Kyrgyzstan will achieve carbon neutrality on the green development platform.
“These guidelines are due to the fact that all over the world climate risks are seen as a threat to sustainable economic development,” the official concluded.
Capital expenditure of states might cross 3% of gross state domestic product in 2023-24, following the Centre’s capital spending push in the annual budget, showed an ET analysis of 16 states.
The analysis revealed that the capex of the 16 states, which account for 80% of the GDP and the total expenditure of the states, might be regarding 20% higher than in the current financial year.
The combined capex of the 16 states and the Centre is expected to be 5.9% of the GDP, as they might spend close to ₹18 lakh crore on capital activities. In the pre-Covid-19 2019-20, the combined spending of the Centre and these 16 states was 4% of the GDP.
In the 2023-24 budget, the Centre increased capex 37% and allocated Rs 3.7 lakh crore for grants to states for the creation of capital assets, an increase of 13% year-on-year.
The Centre is expected to spend 3.3% of the GDP on capital expenditure next fiscal, slightly higher than the states’ spending.
Traditionally, states’ capex as a proportion of GDP has been higher than the Centre’s, but the trend has changed since the pandemic.
“As per the Medium Term Fiscal Framework, states should be doing 3%, as the revenue deficit should be zero. Historically, they used to do more because so much of the funding came from the central government,” said NR Bhanumurthy, vice chancellor, Dr BR Ambedkar School of Economics University, Bengaluru.
In terms of the total budget outlay, the share of capex for the 16 states will be 16.2% in 2023-24. The corresponding share for the Centre is expected to be 22.2%.
Since 2020-21, the Centre’s capex as a proportion of its total expenditure has been higher than that of the states. While the share of states’ capex in total expenditure was 15.9% from 2014-15 till 2019-20, the Centre’s share was a lower 13.1%. But since 2020-21, the Centre’s average capex share has been 16.8% while that of states has been 14%.
Bhanumurthy said the lower allocation for capex might arise due to the states’ willingness to go for easy avenues for spending. “That is why some states are going for the old pension system; it is an easy way to spend. Capex spending is difficult,” he said.
The pull back from the Centre is another significant reason, he said, adding, “Owing to higher devolution, states have been asked to spend more on the social sector. The central government has withdrawn from some of the areas, which may have led to larger committed expenditure.”
