The status paper on Government debt published by Ministry of Finance says that total government debt in India is under manageable level in terms of its size, interest cost and external debt content.
Most remarkable development in the debt scenario is that 78.5% of the total debt is met through open market borrowing by the government. In 2001, market borrowing was just 43% of the total government debt.
Increased share of market borrowing indicates that the government is managing its debt operation in a market oriented manner. There is big pressure on governments to reduce its dependence on SLR to sell its securities and for seeking more market oriented borrowings.
According to the report, central government’s debt liability is positioned at 47.1% of GDP for 2014-15. The debt situation remained at this level over the last three years. The status report says that government is in the path of fiscal consolidation as debt- GDP ratio is at the level suggested by Medium Term Fiscal Policy Statements that are issued along with the budget.
External debt of the central government is just 2.9% of the GDP and this is around 6.2% of the total debt of the centre.
The status paper usually published towards the end of the calendar year, indicate that average interest rate given by the centre is 6.7%. Total government debt in India that combines the debts of the centre and states is 66.7% of GDP.