India’s central government debt is expected to surge to ₹185.27 trillion, or 56.8% of GDP, by FY25, up from ₹93.26 trillion, or 49.3% of GDP, in FY19, as stated by Minister of State for Finance Pankaj Chaudhary in a Lok Sabha reply on Monday.
This projected increase reflects a substantial rise over the past six years, driven by fiscal challenges and strategic economic policies. The growing debt underscores the government’s need to balance economic pressures with public spending.
Debt levels have risen due to increased expenditures on public services, infrastructure, and economic stimulus measures. Higher debt typically signals a fiscal deficit, where government spending exceeds revenue.
In FY20, debt rose to ₹105.07 trillion, or 52.3% of GDP, largely due to increased infrastructure and social scheme spending. The pandemic exacerbated the situation, pushing debt to ₹121.86 trillion, or 61.4% of GDP, in FY21 as the government increased borrowing for relief measures.
Debt continued to climb to ₹138.66 trillion, or 58.8% of GDP, in FY22, despite a slight reduction in the debt-to-GDP ratio due to economic recovery. In FY23, debt increased further to ₹156.13 trillion, or 57.9% of GDP, driven by continued economic recovery efforts and welfare programs. Provisional figures for FY24 show debt at ₹171.78 trillion, or 58.2% of GDP.
The FY25 budget estimates project the debt to reach ₹185.27 trillion, or 56.8% of GDP, reflecting ongoing efforts to support economic growth and manage fiscal deficits. According to the IMF’s April 2024 World Economic Outlook, India’s GDP hit $3.57 trillion in 2023-24, highlighting its growing global economic significance.
