Chennai: A brokerage report has said general government debt—which is the combined liabilities of the Centre and states —is likely to hit a record 91 per cent of GDP this fiscal.
This will be the highest in record since data began to be maintained in 1980. The report by economists of Motilal Oswal Financial Services said general government debt-to-GDP ratio stood at 75 per cent in FY20.
The debt ratio is likely to be at a high 80 per cent by FY30 and is unlikely to fall to the targeted 60 per cent even by FY40 without further hurting growth, it said further.
According to the report, unless private spending picks up strongly, real GDP growth over the next decade will be slower, averaging at 5-6 per cent as against 7 per cent in the 2010s.
The government’s capital outlays have been playing a bigger role in the overall economic growth for the past many years.
At the same time, since FY16, government debt has also been rising continuously. Government debt stood at 66.4 per cent of GDP in FY 2000 and 66.6 per cent in FY15. Since then, it has been heading north at a faster pace, reaching 75 per cent in FY20.