Finance Minister Nirmala Sitharaman said that the Centre has set clear goals for reducing the debt level and enhancing transparency in fiscal management. As per a PTI report, the Finance Minister has also called upon states to implement the same.
Sitharaman stated that from the next financial year, debt levels will be the core focus area, alongside fiscal deficit, and urged states to lower their debt levels so that the country can achieve its goal of becoming a developed nation by 2047.
Bringing down debt-to-GDP ratio
“The central government has set clear goals for transparency in budget-making, ensuring that fiscal management is visible to all and meets the highest standards of accountability. As a result, we have been able to bring down the debt-to-GDP ratio since the post-COVID period, when it had crossed 60 per cent. It is now on a declining path,” she said.
India’s debt-to-GDP ratio increased to 61.4 per cent post-COVID, but policies adopted by the central government helped reduce it to 57.1 per cent by 2023-24. The government expects it to reduce to 56.1 per cent this year.
Transparency in fiscal management
Sitharaman also called upon states to prioritise accountability and transparency in fiscal management, just as the central government has done, which has helped reduce debt levels.
“Unless the debt-to-GSDP is managed better and kept within the FRBM limits and the stock of debt which is being accumulating over the years with high rate of interest which many states are unable to service, unless even those are brought down, you will be borrowing to service the loans, you will not be borrowing for developmental expenditure. That’s a poor play in the fiscal terrain,” Sitharaman said.