The Government of India has cleared the air that the country is not facing any debt crisis and the rumour surrounding it is misleading.
"The government on Monday dismissed apprehensions about India’s external debt, saying out of India’s total external liability of $620.7 billion, the Centre’s share is just $130.8 billion, 21% of the total debt liability," the Economic Times reported.
“The rumour doing the rounds that the central government is burdened with debt is baseless,” the Economic Times reported, quoting a source saying so. The source added that more than 40% of the debt is by non-financial corporations.
There were concerns that as $267 billion repayments are due in less than one year, it would further erode India’s foreign exchange reserves and trigger more weakness in the Indian rupee.
Economic Times reported officials saying that "while it is true that payment of $267.7 billion of debt is due in less than a year, the Centre's share in this is just $7.7 billion or less than 3%, thus the debt level of the government is very much manageable and stands out safe."
As Mint reported earlier, India’s trade deficit widened to a record in June, adding further pressure on the Indian currency.
The trade gap, the amount by which the value of a country’s imports exceeds its exports, rose to $25.63 billion in June, led by a surge in coal and oil imports amid soaring global prices, Mint reported quoting official data.
“Given the relentless rise in commodity prices particularly crude oil over the last six months, we project current account deficit (CAD) to widen to USD 105 bn in FY23 from USD 47 bn in FY22. The expectation of the expansion of the current account deficit is not just driven by elevated global commodity prices but is also linked to the unlocking of the economy reviving pent-up demand," said Suman Chowdhury, Chief Analytical Officer, Acuité Ratings & Research.