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Sunday, July 28, 2013

Govt debt to GDP:India relatively better off.

Government debt to GDP has come to be one of the most critical indicators of the massive fiscal cliff that the US and European economies are staring at. The US seems to have applied a temporary band aid to the problem. But Europe has yet to feel the jitters. Even a relatively sound economy like Germany had government debt as high as 87.9% at the end of FY13. In comparison, India seems far better off.

However, as per equity masters, the UPA government's magic formula of poverty reduction and the Food Security bill could bring India much closer to the US and Europe on this metric. In FY13, the US' government debt to GDP ratio at 108% was nearly double that of India's 66.4%. But the Food Security bill has the potential to narrow the gap.
 
                                 
                                                                       Data source: Finance Ministry, IMF, OECD 

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