Page 87 - ES 2020-21_Volume-1-2 [28-01-21]

70 Economic Survey 2020-21 Volume 1

Figure: 18: Trends in debt-to- GDP for india vis-à-vis other countries
18a. india lowest among G-20 OECD countries 18b. india lowest among G-20 BRiCS
using Total Debt as per cent of GDP countries using Total Debt as per cent of GDP

18c. india at median using Govt Debt as a per 18d. india at median using Govt Debt as a
cent of GDP for G-20 OECD countries per cent of GDP for G-20 BRiCS countries

Source: IMF.

2.34 The Government’s debt portfolio is characterized by very low foreign exchange risk
as the external debt is only 2.7 per cent of GDP ( 5.9 per cent of total Central Government
liabilities) (Figure 20). Of the total public debt, 70 per cent is held by the Centre (Figure 19).

As the central government is entrusted with the responsibility of macro-economic management,
this distribution of debt between the centre and states is desirable because of the incentive
compatibility that it generates. The long maturity profile of India’s public debt (issuance of
longer tenure bonds) along with a small share of floating rate debt (floating rate debt of Central
Government is less than 5 per cent of public debt) tends to limit rollover risks, and insulates the
debt portfolio from interest rate volatility (Figure 21 and 22). 2

2 Source: Status Paper on Government Debt, Department of Economic Affairs, Ministry of Finance, April 2020.