Central Government liabilities are expected to amount to Rs 155,000,000,000 in FY23

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

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

In his response, Chaudhary said the government’s debt risk profile “stands out as safe and reasonable in terms of accepted standards of indicator-based approach to debt sustainability.”

“The majority (about 95%) of public debt is held in local currency. Multilateral and bilateral organizations provide low-cost financing for outstanding external debt,” the minister said.

Interestingly, the Centre’s liabilities are expected to reach 60.2% of GDP in FY23. The Centre’s liabilities decreased to 58.7% of GDP in FY22 as the economy was recovering from the coronavirus outbreak, after peaking at 61.6% of GDP in FY21.

Not only by rating agencies but also by technocrats, India’s public debt has often been recognized as a major economic vulnerability. Fitch Ratings said India’s public finances “remain a credit vulnerability” in June this year, even though it raised its outlook on India’s rating from negative to stable.

The Center will issue bonds this year to finance its expenses, borrowing a record amount on the markets. It aims for a budget deficit of 6.4% of GDP. 20 basis points lower than the updated target of 6.9%, the fiscal deficit in FY22 was 6.7% of GDP.

According to Chaudhary’s response to another question, the combined federal and state government liabilities in FY22 were Rs195.49 lakh crore or 82.6% of GDP. It was not anticipated how much state government liabilities might increase in FY23.

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