Economic Survey's optimism about India's public debt looks misplaced

The Economic Survey 2020-21 has asked the government to raise public spending in the upcoming Budget without the fear of higher fiscal deficit and debt sustainability.

India will not face the problem of debt sustainability even in the worst of scenarios till 2030, the Survey observed.

Chief Economic Advisor Krishnamurthy Subramanian noted in the Survey that in fast-growing emerging economies, rapid growth in gross domestic product (GDP) translates into lower debt-to-GDP ratios, but lower debt does not necessarily lead to higher growth.

The Survey’s optimism about India’s public debt looks misplaced. India entered the pandemic with one of the highest public debt-to-GDP in