RBI contradicts IMF's concerns on India's debt threshold

The Reserve Bank of India (RBI) has rebuffed claims made by the International Monetary Fund (IMF) regarding India's debt-to- GDP ratio. The IMF had suggested that India's debt burden was significantly higher than officially reported, sparking debates within economic circles. However, the RBI's latest statement refutes these assertions, asserting the accuracy of India's debt metrics.India's debt-to-GDP ratio could decline to 73.4 percent by 2030-31 from an estimated 81.6 percent in 2023-24, the Reserve Bank of India's (RBI) monthly bulletin reportedly stated, thus rejecting the International Monetary Fund's (IMF) warning that it could exceed 100 percent in the coming years.
"Our simulations reveal that the general government debt-GDP ratio swerves below the projected path set out by the IMF in its latest Article IV consultation report for India," stated an article titled 'The Shape of Growth Compatible Fiscal Consolidation' and released on February 20 as part of the central bank's monthly bulletin.
Empirical findings show that medium term complementarities between judicious fiscal consolidation and growth outweigh the short-run costs.Further, the spending on social and physical infrastructure, climate mitigation, digitalisation and skilling the labour force can yield long-lasting growth dividends, report officially stated.

(Ira Singh, Asstt Editor, Gandhinagar)