India’s burden of public debt has stayed within reasonable limits

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₹58.6 trillion. This increased to ₹157.4 trillion by 2022-23. That’s an addition of ₹98.9 trillion to the debt stock.

But the absolute level of debt, taken in isolation, is inadequate to convey anything meaningful. For instance, the impact of ₹5 lakh debt on an individual who earns ₹2 lakh per annum will be different, compared to the same burden borne by someone who earns ₹20 lakh annually. Likewise, debt relative to income or output levels, or the debt-to-GDP ratio is a more relevant metric to comment on its scale.

RBI data shows that by the end of fiscal 2013-14, central government debt was around 52.2% of India’s GDP. By the end of 2022-23, this increased to 61%. Clearly, debt did increase over the last 9 years.

Before moving any further, however, it’s important to discuss why this happened. Drivers: The addition to the country’s debt stock was primarily driven by two major developments. First, since 2014, the Narendra Modi government has been investing enormous public funds to create state-of-the-art infrastructure and empower all citizens by enabling equitable access to quality social, physical and digital infrastructure.

Between fiscal years 2014-15 and 2022-23, the government invested ₹115 trillion (about $1.5 trillion) in this vision. That’s an average spend of ₹12.8 trillion per year, almost twice the average annual spend between 2009-10 and 2013-14 of ₹6.85 trillion. The developmental expenditure budget for 2023-24 (at ₹22.64 trillion) is almost thrice the same for 2013-14.

Clearly, the quantum of fund deployment and capacity of the country to absorb such large-scale investments has been raised substantially over the past 9 years. Debt has been an important source to finance this transformation. Second, covid.