Impact of rising debt on the economy

By Prof. Vivek Singh

Many articles are being written on the Indian�economy. The Indian�economy�is strong. There has been a slight increase in public�debt. This growth is not alarming at all. This is natural. Indian�economy�is progressing towards an economic superpower.

India had a public�debt�of ?24.62 lakh crore in the year 1951. ?94.62265 lakh crores was the total liability of the Government of India in March 2020. There has been a slight increase. The total liabilities of the central government increased to ?101.35600 lakh crore by June 2020.
India had external�debt�of $85 billion in 1991, which increased to $317 billion in 2011. India had a foreign�debt�of about $558 billion in March 2020. External�debt�on the country declined by $3.9 billion to $554 billion in June 2020.
The good thing for India is that India relies more on internal�debt�and less on external�debt. Due to this policy of India, about 20% of the total�debt�is external�debt�and the remaining 80% is internal�debt. This is the reason why India’s financial position is strong despite the Corona pandemic.
Debt�pressure is mounting on all the states in the country. By March 2020, there was a total�debt�of about ?40 lakh crore on all the states of the country. I think that by March 2021, there could be a�debt�of up to ?60 lakh crore on all states.

Recent care rating data shows that almost all states of the country have�debt�of millions of crores of rupees. There is total�debt�of ?6.02 lakh crore on Uttar Pradesh, Maharashtra ?5.02 lakh crore, West Bengal ?4.37 lakh crore, Tamil Nadu ?4.04 lakh crore, Rajasthan ?3.43 lakh crore, Andhra Pradesh ?3.41 lakh crore, Gujarat ?3.26 lakh crore, Karnataka ?3.17 lakh crore There is a�debt�of Rs ?2.66 lakh crore on Kerala, Madhya Pradesh ?2.34 lakh crore, Punjab ?2.30 lakh crore, Telangana ?1.68 lakh crore and Orissa ?1.33 lakh crore.

In this context, per capita�debt�varies as per total�debt�in states. Per capita�debt�for the residents of Punjab is ?82771, Haryana ?81287, Kerala ?79771, Tamil Nadu ?56134, Gujarat ?53931, Karnataka ?51981, West Bengal ?47881, Maharashtra ?44734, Madhya Pradesh ?32354 and of Uttar Pradesh is ?30136.

There has been a slight increase in�debt�on the country and all the states. It was necessary to take loans. This will not have any adverse�impact�on the�economy�but will increase productivity. The country will develop. The people of the country will get relief. In view of the Corona pandemic, the central and state governments had to incur additional�debt. This decision was taken keeping in mind the public interest, which is absolutely appropriate. It should be praised.

India has always been more dependent on internal�debt. India’s dependence on external�debt�has been low. The concern is only when the public�debt�of any country exceeds 77% of GDP. At present, the situation in India is much better because the total public�debt�of India is equal to about 71% of the GDP. That too when there is a terrible pandemic like COVID19 in the country.

I would like to remind that in the year 2003, the public�debt�in the country was equal to 84.2% of GDP. Despite the Covid19 pandemic, the country’s public�debt�today is only 71% of GDP. We are in a better position.
If we look at other countries of the world, we will find that Japan’s public�debt�is equal to 240% of GDP. America’s public�debt�is equal to 107%�of its GDP. India today is also in a very good position in terms of external�debt. External�debt�on India is equal to 21%�of GDP. France’s external�debt�is 277%�of its GDP, Germany’s 153%�and Japan’s external�debt� is equal to 94%�of GDP.

There is no need to worry about the financial situation and�debt. The country’s economic situation is constantly improving. The economic recovery is clearly visible in the figures. I have written about it in some of my previous articles. After having COVID19 vaccine in the coming few months, the country’s economic condition will continue to improve further. India is on the verge of becoming an economic superpower.