As per the Motilal Oswal report (1), the dept is most likely to stay over 90% up to the financial year 2013 before slowly reducing at 80% by the fiscal year 2030. The report further stated that since the government dept is in GDP ratio, it will restrict the ability of the government to grow its spending.
It means that the government won’t be able to support economic activity in the current decade. However, the government has contributed significantly to economic activity in the previous few years.
Motilal Oswal: Government is Unlikely to Grow Its Investment
The real GDP growth of India is 6.8% since the financial year 2014 to 2020. However, during the period, there is an average 9% hike in real fiscal spending. In the financial year 2020, the real GDP growth has dipped to 4.2$. The financial expenditure has contributed approximately 1.1% point or 27% to real annual growth. The debt of the Government of India has jumped to 75% of GDP of the fiscal year 2020 compared to 70% in the financial year 2018. It is likely to relinquish 91% in the financial year 2021 per the EcoScope estimation report of Motilal Oswal Financial Services.
As per the study of Motilal Oswal, the primary growth, when eases to 7.33% in the next decade from the previous 11.3%, is apparent that the government won’t be able to grow its investments.
A large part of revenue spending is non-interest. It includes spending on defense, salary, wages, pensions, etc., which are non-discretionary. There is a possibility that the financial investment will increase at a slower pace in the 2020 decade.
Author: Rucha Joshi
Source : https://timesnext.com/motilal-oswal-debt-of-government-to-stand-at-80-of-gdp-by-fy30/
Date : 2020-08-26T10:11:32.000Z