New Delhi: The Chief Economic Adviser (CEA) to Government of India, V. Anantha Nageswaran, on Friday, June 16, defended the rise in India’s debt, saying it is in line with the country’s economic growth.Nageswaran made these remarks in response to criticism from the Congress party regarding the increase in debt under the Narendra Modi government since 2014.Congress party spokesperson, Gourav Vallabh, has criticised the government, claiming that the debt per Indian has increased significantly since 2014, from Rs 43,124 to Rs 1,09,373.Vallabh raised concerns about the unequal distribution of wealth, citing a K-shaped recovery in which 50% of the population owns only 3% of the country’s total wealth and pays 64% of the goods and services tax collected.In contrast, Nageswaran emphasised that it is important to consider the debt figures relative to the size of the economy rather than solely focusing on absolute numbers.“Government’s borrowings go up as the economy grows,” he said at the Federation of Indian Chambers of Commerce and Industry in New Delhi.He pointed out that between 2004 and 2014, government debt increased ninefold, whereas between 2014 and 2023, it increased threefold.Additionally, he highlighted that India’s debt as a percentage of GDP only rose by 3 percentage points over a 17-year period, from 81% in 2005 to 84% in 2021-22. Comparatively, the debt of many other countries increased by 20-30 times during the same period, the Hindu BusinessLine reported him as saying.Nageswaran further justified the sustainability of India’s debt by explaining that the country’s nominal GDP growth is around 11-12%, while the government’s cost of borrowing is only 7%. According to him, this indicates that the debt burden is manageable and has not grown disproportionately.The differing viewpoints on India’s rising debt highlight the complex economic challenges facing the country. While the CEA argues that the debt is in line with economic growth and remains sustainable, the opposition party raises concerns about wealth inequality and the impact of the borrowed funds on the broader population.
