New Delhi: India's public debt, which is almost 82 percent of GDP, is very high, but the country does not face debt sustainability problems due to its high growth rate and higher share of currency debt local, said NCAER director general Poonam Gupta.
Addressing an event organized by NCAER, Gupta said India's high debt levels are sustainable for now due to higher real or nominal GDP and most of the debt being held in rupees.
States together hold a third of the total debt and, business as usual, their debt levels will only rise further over the next five years, Gupta said.
"In a handful of states like Punjab and Himachal Pradesh, the debt-to-GDP ratio could rise by 50 per cent," Gupta said, adding that states, including the most indebted ones, are also not facing sustainability issues as they have been. implicit guarantee of the Center and how states cannot have debt in foreign currency or floating rate.
Making a comparison between Punjab, one of the most indebted states, and Gujarat, with low debt, he pointed out that the most indebted states are ironically better off, since the interest rate is similar for all and, in fact, the most indebted states debtors have longer maturities. and pay little premium.
"The more prudent states need a better deal. They are de facto subsidizing the most indebted states. The Finance Commission can reward those states for their fiscal prudence and incentivize spendthrifts to be more fiscally responsible," Gupta said.
Participating in the debate on 'Fiscal Challenges of States', Mr Govinda Rao, Councilor, Takshashila Institution, cited 'proliferation of subsidies for electoral benefits' as one of the reasons for rising debt of states .
Pointing out the Centre's overall responsibility in debt control and underlining the need for a different approach, he said, "Interest payments by profligate states are still considered legitimate."
In 2022-23, Punjab, Himachal Pradesh and Bihar are the three most indebted states, while the least indebted are Odisha, Maharashtra and Gujarat.
Addressing an event organized by NCAER, Gupta said India's high debt levels are sustainable for now due to higher real or nominal GDP and most of the debt being held in rupees.
States together hold a third of the total debt and, business as usual, their debt levels will only rise further over the next five years, Gupta said.
"In a handful of states like Punjab and Himachal Pradesh, the debt-to-GDP ratio could rise by 50 per cent," Gupta said, adding that states, including the most indebted ones, are also not facing sustainability issues as they have been. implicit guarantee of the Center and how states cannot have debt in foreign currency or floating rate.
Making a comparison between Punjab, one of the most indebted states, and Gujarat, with low debt, he pointed out that the most indebted states are ironically better off, since the interest rate is similar for all and, in fact, the most indebted states debtors have longer maturities. and pay little premium.
"The more prudent states need a better deal. They are de facto subsidizing the most indebted states. The Finance Commission can reward those states for their fiscal prudence and incentivize spendthrifts to be more fiscally responsible," Gupta said.
Participating in the debate on 'Fiscal Challenges of States', Mr Govinda Rao, Councilor, Takshashila Institution, cited 'proliferation of subsidies for electoral benefits' as one of the reasons for rising debt of states .
Pointing out the Centre's overall responsibility in debt control and underlining the need for a different approach, he said, "Interest payments by profligate states are still considered legitimate."
In 2022-23, Punjab, Himachal Pradesh and Bihar are the three most indebted states, while the least indebted are Odisha, Maharashtra and Gujarat.