IMF's projection of govt debt exceeding 100 pc of GDP by FY28 is 'misconstrued': Finance ministry
New Delhi, Dec 22: India on Friday said the International Monetary Fund's projection of the general government debt exceeding 100 per cent of the country's GDP by 2027-28 is "misconstrued".
In a statement, the finance ministry said that several other countries are expected to perform worse than India on the debt front.
For instance, the corresponding figures of 'worst-case' scenarios for the USA, UK and China are about 160, 140, and 200 per cent, respectively, which is far worse compared to 100 per cent for India, the statement said.
"It is also noteworthy that the same report indicates that under favourable circumstances, the general government debt to GDP ratio may decline to below 70 per cent in the same period.
"Therefore, any interpretation that the report implies that general government debt would exceed 100 per cent of GDP in the medium term is misconstrued," the ministry said in its rebuttal to the IMF report following the annual Article IV consultation with Indian authorities.
Further, the ministry said the general government debt (including both state and centre) has steeply declined from about 88 per cent in FY 2020-21 to about 81 per cent in 2022-23, and the Centre is on track to achieve its stated fiscal consolidation target to reduce fiscal deficit below 4.5 per cent of GDP by FY 2025-26.
"The states have also individually enacted their fiscal responsibility legislation, which is monitored by their respective state legislatures.
"Therefore, it is expected that the general government debt will decline substantially in the medium to long term," it said.
As per Article IV consultation report by the IMF earlier this week, while the budget deficit has eased, public debt remains elevated and fiscal buffers need to be rebuilt.
IMF reviews a country's current and medium-term economic policies and outlook.
Looking forward, India's elevated public debt calls for additional revenue and expenditure measures, such as further GST and subsidy reforms, while continuing to prioritise public investment and targeted support for the vulnerable, the report said.
Meanwhile, defending India's position, the finance ministry in the statement said, it is important to note that general government debt in India is overwhelmingly rupee-denominated, with external borrowings from bilateral and multilateral sources contributing a minimal amount.
"This has been highlighted in the IMF Report. Domestically issued debt, largely in the form of government bonds, is mostly medium or long-term with a weighted average maturity of roughly 12 years for central government debt. Therefore, the rollover risk is low for domestic debt, and the exposure to volatility in exchange rates tends to be on the lower end," it said.
The shocks experienced this century by India were global in nature such as the global financial crisis, taper tantrum, Covid and Russia-Ukraine War, and these shocks uniformly affected the global economy and barely few countries remained unaffected, the statement said.
Therefore, the ministry said that any adverse global shock or extreme event is expected to uni-directionally impact all the economies in an interconnected and globalised world.
A cross-country comparison shows that India has done relatively well and is still below the debt level of 2002, it added.
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Putin meets Iran's FM Araghchi, says Russia ready to do its best to help bring peace to West Asia
Moscow (PTI): Iran's Foreign Minister Abbas Araghchi on Monday met Russian President Vladimir Putin, who hailed the Iranian people for fighting bravely and heroically for their sovereignty and said Moscow is ready to do its best to help bring peace to West Asia as soon as possible.
Araghchi, who held talks with Omani and Pakistani leadership before arriving in Russia, met Putin in St. Petersburg and thanked him for supporting Iran, state-owned TASS news agency reported.
"Russia is ready to do everything in its power to ensure that peace in the Middle East is achieved as soon as possible," Putin said during his meeting with Araghchi, which was also attended by Russian Foreign Minister Sergey Lavrov.
Revealing that he received a message from Iranian Supreme Leader Mojtaba Khamenei last week, Putin asked Araghchi to convey his "gratitude for this message and best wishes for his health and well-being."
He praised the Iranian people for fighting "bravely and heroically" for their sovereignty, Iran's state-run PRESS TV reported.
"We really hope that, based on the courage and desire for independence, the Iranian people, under the guidance of the new leader, will weather this difficult period of trials and peace will come,” Putin said.
He also stressed that Russia “intends to maintain” its strategic relations with Iran.
Araghchi said that the world witnessed Iran’s strength in countering the US during the recent war, and that the Islamic Republic is a "stable and powerful establishment."
"With their courage, the Iranian people succeeded in resisting the US aggression and will be able to endure it,” he said.
He said that it became clear that Iran has “great friends and allies” like Russia, and conveyed “warmest greetings” from Supreme Leader Mojtaba Khamenei and President Masoud Pezeshkian to the Russian leader.
Araghchi said relations between Moscow and Tehran represent a “strategic partnership at the highest level” and will continue to develop "regardless of circumstances."
"We are grateful to you for the solid and strong positions in support of the Islamic Republic of Iran," he said.
Foreign Minister Lavrov said that the talks between President Putin and the Iranian Foreign Minister were "useful and constructive."
Kremlin Spokesman Dmitry Peskov later said that Russia is "ready to provide any good offices, any mediation services that are acceptable to the parties."
"We will be ready to do everything so that ultimately peace ensues, guaranteed peace, and that there is no return to hostilities," Peskov was quoted as saying by TASS.
He was asked how Moscow can assist in future negotiations on the Iranian settlement.
Araghchi arrived in Russia after his whirlwind trip to Islamabad, which, according to him, was “very productive” and involved “good consultations" with Pakistan's Army Chief Field Marshal Asim Munir, amid uncertainty over the second round of peace talks to resolve the war in West Asia.
"We held good consultations with our friends in Pakistan. The trip was successful. We assessed the outcome of our recent (meetings) and discussed in what direction and under what conditions talks can move on,” Araghchi said in a video posted on his Telegram channel upon his arrival in St Petersburg.
Referring to the second round of talks between the US and Iran to resolve the conflict in West Asia, Araghchi said: "Developments have taken place in the negotiations."
"Despite some progress in earlier rounds, the talks failed to reach their objectives due to the Americans' approach, the excessive demands they made, and the wrong approaches they adopted. Therefore, it was necessary to consult with our friends in Pakistan to review the latest situation,” Iran's official news agency IRNA quoted him as saying.
He said that the trip to Pakistan was a good opportunity to review developments related to the US-Israeli war against Iran, expressing confidence that “these consultations and coordination between the two countries will be highly significant.”
Araghchi arrived at St. Petersburg's Pulkovo Airport early Monday, where he was welcomed by Russian officials and Iran’s ambassador to Russia, Kazem Jalali, the report said.
The first round of peace talks between Iran and the US, held on April 11 and 12, failed to bring the desired result for the parties to the conflict.
The Iranian minister arrived in Islamabad for the second time on Sunday after a short visit to Oman, where he held talks with Sultan Haitham bin Tariq al-Said on security in the Strait of Hormuz and diplomatic efforts to end the Iran-US conflict.
After Araghchi left Pakistan for Oman on Saturday, President Donald Trump announced that US negotiators Steve Witkoff and Jared Kushner would no longer be going to Islamabad for talks with Iran, contending that Washington held all the cards on the matter.
Trump on Sunday reiterated that the US and Iranian officials can talk by phone for a peace solution to the conflict.
On Tuesday, Trump extended the two-week ceasefire with Iran indefinitely to give Tehran more time to prepare a unified proposal to end the war, just hours before the truce was set to expire.
The war began when the US and Israel jointly attacked Iran on February 28, killing Iranian Supreme Leader Ayatollah Ali Khamenei and several top commanders. The retaliation by the Islamic Republic extended the war to the entire Gulf region.
