Nim has estimated repayments of around Rs 4.4 trillion for 2023/24.
While economists forecast in a separate survey that the government would reduce the budget deficit to 6.0% of GDP in 2023/24, this would still be much lower than the average of 4% to 5% seen since the 1970s. will be up and far away from the target to be reached. 4.5% by 2025/26.
The deficit is more than double what it was before the pandemic. Rising interest rates have increased the burden of repaying the borrowed money.
debt stability
The International Monetary Fund said last month that India needs a more ambitious plan for fiscal consolidation to ensure that debt is sustainable over the medium term. The government says that its current plan is already sufficient for this work.
The indebtedness of the federal and state governments is as high as 83% of annual gross domestic product (GDP), which is higher than in many other emerging economies. The country’s sovereign credit rating is just one notch above the junk level.
Union Bank economist Sujit Kumar said, “With the fiscal deficit and public debt at historically high levels, India will have to delicately balance fiscal discipline with the need to support growth.” Heavy load to be carried.” of India.
Kumar said infrastructure investment would be “the clear priority” for spending but the economic slowdown would reduce tax collections and limit the government’s ability to keep capital expenditure at the same pace as it has since 2020/21.
The poll also showed that the Indian government’s capital expenditure would increase to a record 8.85 trillion rupees in the coming fiscal year, which is about 2.95% of GDP.
But such spending growth is likely to be barely half the pace of the past three years.
India needs a lot of government money to improve infrastructure to fulfill its ambition of becoming an alternative to China as the factory of the world.
When asked what the two most pressing budget priorities should be, just over half of the respondents, 18 out of 36, said fiscal discipline and infrastructure investment. The other 18 nominated job creation, education, healthcare or rural development.
The survey found that India’s government would cut food and fertilizer subsidies by 3.7 trillion rupees, down more than 25% from the 2022/23 budgeted level of about 5 trillion rupees.