Editor's Pick | Don’t misconstrue IMF’s debt outlook on India, says Finance Ministry

The Union Finance Ministry on Friday sought to dispel “certain” factually incorrect “presumptions” being made about India’s indebtedness levels from a scenario-based assessment by the International Monetary Fund (IMF) that warned government debt could hit 100% of GDP by 2027-28 under adverse circumstances. “In the light of the IMF’s latest Article IV consultations with India, certain presumptions have been made taking into account possible scenarios that does not reflect factual position,” the Ministry said. The Ministry stressed that any interpretation that the report implies that general government debt would exceed 100% is misconstrued. The Ministry said this was a clarification of factual position and not a “rebuttal” to the IMF, but “rather an effort to arrest misinterpretation/misuse of the comments in the IMF document”. General government debt includes debt of both the Centre and the States, and had dipped “steeply” from about 88% in 2020-21 to about 81% in 2022-23, the Ministry said, sharing a cross-country comparison on debt levels to assert that “India has done relatively well and is still below the debt level of 2002”. The IMF’s Executive Board said on December 18 that it had concluded its annual consultation with India, and its Directors had recommended “ambitious medium-term consolidation efforts given elevated public debt levels and contingent liability risks”. “While the budget deficit has eased, public debt remains elevated and fiscal buffers need to be rebuilt”, the IMF said, adding that the Board encouraged “authorities to put in place a sound medium-term fiscal framework to promote transparency and accountability and align policies with India’s development goals”. “Among the various favourable and unfavourable scenarios given by the IMF, under one extreme possibility, like once-in-a-century COVID-19, it has been stated that the General Government’s debt could be ‘100% of debt-to-GDP ratio’ under adverse shocks by 2027-28. It talks only of a worst-case scenario and is not fait accompli,” the Ministry said. “The corresponding figures of ‘worst-case’ scenarios for the U.S., U.K. and China are about 160%, 140%, and 200%, respectively, which is far worse compared to 100% for India… It is also noteworthy that the same report indicates that under favourable circumstances, the General Government Debt-to-GDP ratio may decline to below 70% in the same period,” it emphasised. Editorials Two down: On the conviction of a senior functionary and the DMK Awards for words: On the Sahitya Akademi awards The Hindu’s Daily News Quiz The Lok Sabha and the Rajya Sabha were adjourned sine die a day in advance on Thursday, how many MPs were suspended over all? 150 146 145 140 To know the answer and to play the full quiz, click here. [logo] Editor's Pick 23 December 2023 [The Hindu logo] In the Editor's Pick newsletter, The Hindu explains why a story was important enough to be carried on the front page of today's edition of our newspaper. [[Arrow]Open in browser]( [[Mail icon]More newsletters]( Don’t misconstrue IMF’s debt outlook on India, says Finance Ministry The Union Finance Ministry on Friday sought to dispel “certain” factually incorrect “presumptions” being made about India’s indebtedness levels from a scenario-based assessment by the International Monetary Fund (IMF) that [warned government debt could hit 100%]( of GDP by 2027-28 under adverse circumstances. “In the light of the IMF’s latest Article IV consultations with India, certain presumptions have been made taking into account possible scenarios that does not reflect factual position,” the Ministry said. The Ministry stressed that any interpretation that the report implies that general government debt would exceed 100% is misconstrued. The Ministry said this was a clarification of factual position and not a “rebuttal” to the IMF, but “rather an effort to arrest misinterpretation/misuse of the comments in the IMF document”. General government debt includes debt of both the Centre and the States, and had dipped “steeply” from about 88% in 2020-21 to about 81% in 2022-23, the Ministry said, sharing a cross-country comparison on debt levels to assert that “India has done relatively well and is still below the debt level of 2002”. The IMF’s Executive Board said on December 18 that it had concluded its annual consultation with India, and its Directors had recommended “ambitious medium-term consolidation efforts given elevated public debt levels and contingent liability risks”. “While the budget deficit has eased, public debt remains elevated and fiscal buffers need to be rebuilt”, the IMF said, adding that the Board encouraged “authorities to put in place a sound medium-term fiscal framework to promote transparency and accountability and align policies with India’s development goals”. “Among the various favourable and unfavourable scenarios given by the IMF, under one extreme possibility, like once-in-a-century COVID-19, it has been stated that the General Government’s debt could be ‘100% of debt-to-GDP ratio’ under adverse shocks by 2027-28. It talks only of a worst-case scenario and is not fait accompli,” the Ministry said. “The corresponding figures of ‘worst-case’ scenarios for the U.S., U.K. and China are about 160%, 140%, and 200%, respectively, which is far worse compared to 100% for India… It is also noteworthy that the same report indicates that under favourable circumstances, the General Government Debt-to-GDP ratio may decline to below 70% in the same period,” it emphasised. Editorials [Arrow][Two down: On the conviction of a senior functionary and the DMK]( [Arrow][Awards for words: On the Sahitya Akademi awards]( The Hindu’s Daily News Quiz The Lok Sabha and the Rajya Sabha were adjourned sine die a day in advance on Thursday, how many MPs were suspended over all? - 150 - 146 - 145 - 140 To know the answer and to play the full quiz, [click here.]( Today’s Best Reads [[Mobile Internet suspended in J&K’s Poonch, Rajouri amid massive anti-terrorist operation] Mobile Internet suspended in J&K’s Poonch, Rajouri amid massive anti-terrorist operation]( [[Weddings, guns, funerals: Celebratory firings continue to kill in north India] Weddings, guns, funerals: Celebratory firings continue to kill in north India]( [[Indian embassy in contact with French authorities after aircraft with 303 citizens grounded] Indian embassy in contact with French authorities after aircraft with 303 citizens grounded]( [[Parliament security breach | Accused Mahesh Kumawat's custody extended till January 5] Parliament security breach | Accused Mahesh Kumawat's custody extended till January 5]( Copyright @ 2023, THG PUBLISHING PVT LTD. 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