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LATEST NEWS UPDATES | CAG raises concerns over Centre’s ballooning debt, interest burden

CAG raises concerns over Centre’s ballooning debt, interest burden

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published Published on Aug 11, 2022   modified Modified on Aug 11, 2022

-The New Indian Express

Meanwhile, data released by the department of economic affairs in the Finance Ministry showed interest paid on debt has increased to Rs 8.05 lakh crore in FY22 from Rs 6.80 lakh crore in FY21.

NEW DELHI: The Comptroller and Auditor General (CAG) of India have raised concern over increasing Central government debt as several indicators gauging the sustainability of debt have turned unfavourable since 2015-16. The CAG in a report tabled in parliament recently pointed out that some of the indicators like debt/GDP ratio, interest repayment to revenue receipts and interest rate spread became unfavourable during the five-year period from 2015-16 to 2019-20.

The Central government debt-to-GDP ratio in 2019-20 was 52.30% compared to 50.5% in 2015-16. The government was using 34% of the revenue earned in 2019-20 to pay interest on the debt. This was 32% in 2015-16. The report also pointed out that although the average interest cost declined from 6.91% in FY16 to 6.61% in FY20, the actual interest paid on debt consistently increased from Rs 4.57 lakh crore in FY16 to Rs 6.55 lakh crore in FY20 due to expanding overall debt.

Another area of concern pointed out by the CAG is that the interest spread, which is the difference between nominal GDP growth rate and average interest cost, turned negative in 2019-20. The CAG said the government must have in place a requisite plan to achieve the target set by the FRBM act to cap the Central government debt-to-GDP ratio of 40%.

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The New Indian Express, 11 August, 2022, https://www.newindianexpress.com/business/2022/aug/11/cag-raises-concerns-over-centresballooning-debt-interest-burden-2486422.html?fbclid=IwAR00nQ3AlVXz5svtMDyy7eJkB1aTJyj8t0Df7JlrQ9bTKPjC6MO6z1IL178


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