Interest payment of the government has increased to 3.1 per cent of the GDP to Rs 7.31 lakh crore in 2021-22, Minister of State for Finance Pankaj Chaudhary told the Lok Sabha on Monday. Interest paid on public debt during 2014-15 stood at 3.27 lakh crore or 2.6 per cent of the GDP, he said in a written reply. During 2014-15, the total central government liabilities stood at Rs 62.44 lakh crore or 50.1 per cent of GDP.
This increased to Rs 138.88 lakh crore or 58.7 per cent of GDP at the end of 2021-22, he said. The Centre’s debt is projected to hit 60.2 per cent of the GDP in the current fiscal to Rs 155.33 lakh crore, he said in reply to another question. The combined state and central government liabilities increased from Rs 76.27 lakh crore (61.2 per cent of GDP) in 2014-15 to Rs 195.49 lakh crore (82.6 per cent of GDP) As per the revised Fiscal Responsibility and Budget Management (FRBM) Act the government would endeavour to ensure that the general government debt does not exceed 60 per cent of GDP and the Central Government debt does not exceed 40 per cent of GDP by the end of the financial year 2024-25.
In 2020-21, the Central Government debt increased by more than 9 percentage points of GDP over the previous year’s debt mainly on account of the COVID-19 global pandemic, which hugely disrupted projections of the Government’s public finances, including a contraction in GDP/denominator, he said. The Government has announced its commitment to reduce the fiscal deficit to a level below 4.5 per cent of GDP by FY 2025-26.
Increasing the buoyancy of tax revenue through improved compliance, monetisation of assets, improving efficiency and effectiveness of public expenditure etc. are the important measures initiated by Government to control the fiscal deficit and the debt, he said. The risk profile of the Government’s debt stands out as safe and prudent in terms of accepted parameters of indicator-based approach for debt sustainability, he said. The Government debt is held predominantly (about 95 per cent) in domestic currency. Outstanding external debt is financed by multilateral and bilateral agencies at concessional rates,” it said. Debt Management Strategy which revolves around three broad pillars mainly low cost, risk mitigation and market development for Government securities has been put in place, he said.