Economic Survey 2022-23: India's core debt is lower than global average

The latest Economic Survey, released on Tuesday, a day before the Union Budget for FY24, said India's core debt is lower than global average and its core debt-to-GDP ratio is lower when compared to major economies of the world. Also, India’s total core debt-to-GDP ratio in Q2 2022 is 7 per cent lower than Q2 2008 level. Many economic experts said that a comfortable debt-to-GDP ratio indicates strong domestic macros and lower financial risk. The global average of debt-to-GDP ratio is 248 per cent for all the countries. While some of the major economies like US has 264 per cent, England (UK) has 257 per cent, France has debt-to-GDP ratio of 345 per cent, Japan has 426 per cent and China has 295 per cent. However, India has one of the lowest debt-to-GDP ratio of 170 per cent.

In India, the household sector accounts for 36 per cent debt to GDP, non-financial private sector has 88 per cent as debt to GDP size of the country while the government debt is 82 per cent to GDP. The global average for household debt is 62 per cent of the GDP, private non-financial companies' global average is 160 per cent, One of the most striking feature of this finding from economic survey is that India’s household sector and non-financial private sector have much lower debt when compared with the global economies. While government debt global average is 88, the government debt in major economies such as US has 108 per cent to the GDP size, UK has 107 per cent, China has 74 per cent, France has 114 per cent debt and Japan government has debt of 238 per cent to GDP size. However, even though Indian government's core debt is lower than global average, it has increased 16 per cent from the Q2 2008 level.  

The economic survey stated that: “Non-financial sector debt of most economies has increased considerably as a percentage of GDP since Q1 of 2008 when the global financial crisis struck. India is, however, one of the few countries whose debt burden has declined over this period, mainly because of the country’s banking sector balance sheet clean-up and the corporate sector’s deleveraging exercise undertaken during the last decade. Yet, an increase in the general government debt burden in India has attracted much attention, even as systemic risks of a financial breakdown are concentrated in other parts of the world.”