Central Government's liabilities likely to stand at Rs155 lakh billion in FY23

26 Jul 2022 , 09:40 AM

In a written response to a question in the Lok Sabha on July 25, Minister of State for Finance Pankaj Chaudhary stated that the overall liabilities of the Central government are anticipated to increase to Rs155.33 lakh crore in FY23.

This will be a rise of Rs138.88 lakh crore or 12% from the FY22 total. In FY23, the Center plans to issue bonds to raise a record-breaking gross borrowing amount from the market of Rs14.95 lakh crore. As of July 25, the federal government has 84.45 lakh crore worth of outstanding securities.

In his response, Chaudhary stated that the risk profile of the government’s debt “stands out as safe and sensible in terms of recognized standards of indicator-based approach for debt sustainability.”

“The majority (about 95 percent) of the government debt is held in local currency. Multilateral and bilateral organizations offer low-cost financing for outstanding external debt “The minister said.

Interestingly, the Center’s liabilities are projected to rise to 60.2 % of GDP in FY23. The Center’s liabilities decreased to 58.7 % of GDP in FY22 as the economy recovered from the coronavirus epidemic, down from a peak of 61.6 % of GDP in FY21.

Not just by rating agencies but also by technocrats, India’s public debt has frequently been recognized as a major economic vulnerability. Fitch Ratings stated that India’s public finances “remain a credit vulnerability” in June of this year, even as it upgraded its outlook on India’s rating from negative to stable.

The Center will issue bonds this year to finance its spending, borrowing a record amount from the markets. It aims to have a budget deficit of 6.4% of GDP. 20 basis points less than the updated objective of 6.9 percent, the budget deficit in FY22 was 6.7% of GDP.

According to Chaudhary’s response to a different query, the cumulative liabilities of the federal and state governments in FY22 were Rs195.49 lakh crore or 82.6 percent of GDP. How much the liabilities of state governments may rise in FY23 was not anticipated.