In this article for the Mint, Niranjan Rajadhyaksha, CEO and Senior Fellow, Artha Global, writes about India’s projected increase in public debt ratio and explains why India needs to pay more attention to reducing the ratio.

Excerpts below:

“The public debt ratio had begun to inch up during the second half of the previous decade. However, it was the need to respond to the dislocations during the early months of the pandemic that threw public finances off-track. The government had to spend heavily to protect households whose incomes had dried up, prevent enterprises from collapsing during lockdowns, and make vaccines available to citizens. All this had to be done through extra borrowing, since tax collections had fallen sharply. The consolidated Indian public debt ratio of the Union government and states shot up by 15 percentage points to reach levels never seen before. The same story played itself out in most other countries.

A strong fiscal response was essential during those painful months. As the pandemic threat has retreated and the economy has recovered, more attention needs to be paid to gradually bringing down the public debt ratio over the rest of this decade. There are no quick fixes.”

Read the full article here.