India’s Debt Management, Fiscal Efforts, and Economic Growth Strategies

India's Debt Management, Fiscal Efforts, and Economic Growth Strategies
India's Debt Management, Fiscal Efforts, and Economic Growth Strategies

As of March 31, 2023, the central government’s indebtedness has reached ₹155.6 lakh crore, equivalent to 57.1% of the GDP. This percentage marks a reduction from the previous fiscal year of 2020-21, wherein the debt-to-GDP ratio stood at 61.5%. This decline underscores the government’s persistent efforts in orchestrating fiscal prudence and controlling the accumulation of debt. Moreover, an array of comprehensive initiatives has been rolled out to bolster capital expenditure, stimulate economic expansion, and enhance both macro and micro-level welfare.

The commitment to steering India towards the coveted $5 trillion economy is underscored by a strategic roadmap. This blueprint encompasses the advancement of the digital economy, the facilitation of technology-driven development, the transition to renewable energy sources, and a multi-faceted approach to sustainable growth. These ambitions are complemented by an array of groundbreaking reforms initiated since 2014, including the implementation of GST, the enactment of IBC, reductions in corporate tax rates, and the inception of schemes like Make in India, Start-up India, and Production Linked Incentives.

A remarkable trajectory is witnessed in Gross Fixed Capital Formation (GFCF) within the Indian economic landscape. The provisional estimates showcase an ascent from ₹45.41 lakh crore in 2018-19 to ₹54.35 lakh crore in 2022-23. Integral to this expansion are the ‘Scheme for Special Assistance to States for Capital Expenditure’ and the ‘Scheme for Special Assistance to States for Capital Investment’, both geared towards propelling vital projects across sectors such as healthcare, education, irrigation, and power. The fiscal year 2023-24 allocates ₹84,883.90 crore to these special assistance schemes, with an allocation of ₹29,517.66 crore already disbursed to states for capital expenses and investments.

The government’s steadfast emphasis on infrastructure development and investment is evident in the trajectory of capital expenditure. From constituting 2.15% of the GDP in 2020-21, it has surged to 2.7% of the GDP in 2022-23. The Union Budget for 2023-24 further augments the capital investment allocation by an impressive 33%, reaching ₹10 lakh crore, which accounts for 3.3% of the GDP. This substantial augmentation is strategically engineered to invigorate economic growth while concurrently attracting private investment, propelling India toward a future of unparalleled economic vitality.