The government has said there has been a 3.60 percentage points improvement in its total outstanding liabilities as of FY13 at 46.7 percent of GDP compared to 50.3 percent reported in the Budget documents. According to third status report of public debt released last evening by the finance ministry, a lion’s chunk of this debt is of domestic origin, with internal debt constituting 92.9 percent of the total debt as of March 2013 with external debt accounting for the remaining 7.1 percent.
The public debt accounted for 86.9 percent of total liabilities, while public account liabilities constituted the remaining 13.1 percent in FY 13, it said.
The report noted that public debt has shown major improvement over the years with the liabilities coming down to 40.6 percent in FY13, a steady decline from 48.1 percent in FY03 to 37.1 percent in FY08, thanks to both fiscal consolidation as well as high GDP growth during the period.
However, there has been a 60 bps spike in the debt position from FY12 levels to 46.7 percent from 46.1 percent of GDP in the previous fiscal. The report said the trend reversed marginally during FY09 and in FY10 when fiscal deficit rose due to the fiscal easing to counter the impacts of global financial crisis. As a result, public debt to GDP ratio rose from 37.1 percent in FY08 to 39.9 percent in FY10.
In FY11, growth recovered and fiscal deficit dipped to 4.8 percent, leading to a decline in public debt to 37.9 percent of GDP. Subsequently, fiscal deficit widened again in FY12 to 5.7 percent of GDP which, along with a growth deceleration, led to increase in the ratio of public debt to GDP in March
2013 to 40.6 percent.
However, the long-term trend of decline in the ratio of public debt to GDP is intact, the report noted. On the flip side, the share of public debt in total liabilities has gone up from 80.1 percent in FY09 to 86.9 percent in FY13, reflecting the increased recourse to market related instruments for financing fiscal deficit.
