Page 27 - Banking Finance August 2023

ARTICLE

GOVERNMENT'S

DEBT

SHOPPING:

NEED OF TIME

ublic debt or Govt Debt is the total amount public debt to its gross domestic product (GDP) and is a
P borrowed by the government of a country. In widely accepted parameter to understand and compare the
health of the economy.
the Indian context, public debt includes the total
State). liabilities of the government (Both Central and Debt to GDP= Total debt of the country/Total GDP of the
country
Since the government relies heavily on market borrowing
to meet its operational and developmental expenditure, the
The general principle is higher a country's debt to GDP ratio
study of public debt becomes key to understand the financial
means higher is the risk of default. Delay in making
health of the government and its ability to raise funds to
payments by a country triggers the panic button of domestic
improve the economy by increasing Government
and international financial markets.
expenditure in current and post covid scenario.
As per Government of India report dated May 2020, Overall
Let's understand the public debt Facts in
government debt to GDP ratio which includes the
Indian Context: central govt debt and state govt debt as a percentage to
The debt to GDP ratio is the metric comparing a country's GDP dropped marginally by 0.1% from 68.7% in fiscal 2017-
18 to 68.6% or Rs 1.3 crore crores ( Rs 130 trillion) in FY
About the author 2018-19.

Dr Divya Kumar Agrawal
Overall government debt to GDP ratio of the central govt
Chief Manager (Research)
debt as a percentage to GDP dropped marginally by 0.1%
State Bank Institute of Credit and Risk
Management from 45.8% in fiscal 2017-18 to 45.7% or Rs 86.73 lacs crores
Gurugram
in FY 2018-19.
BANKING FINANCE | AUGUST | 2023 | 27