Home Editor's picks Media spreads half-truths about central government debt under Modi

Media spreads half-truths about central government debt under Modi

When it comes to external debt (borrowings from foreign governments and institutions), the figure saw an increase of 443% under UPA-I, 60% under UPA-II and 0.04% under the Modi government.

On January 19th 2018, several media houses reported how the central government debt had increased massively under the Modi government. India Today headline screamed how central debt under the Modi government had surged by a whopping 50%, and Economic Times reported how India’s debt is up by 50% under the Modi era according to the 8th Edition of the Status Paper on Government Debt that was released on Friday.

Soon, the anti-Modi brigade latched on to the report and started using it to deride the Modi government.

While there is nothing factually wrong in these reports, the real mischief lies in what these reports don’t tell you.

- Ad - - article resumes -

What the reports don’t clarify:

The increase in debt is perfectly normal, in fact, India is doing better than many major economies on this parameter

The central government borrows money (from internal and external sources) to fund the fiscal deficit. Govt debt is nothing but an accumulation of fiscal deficits over the years. Government debt over the years has always increased. The important factor here is the sustainability of the debt, and the most important parameter to evaluate sustainability is the Debt to GDP ratio (because as the GDP increases, govt’s revenue increases and thus its ability to service debt enhances). In India’s case, the Central government debt to GDP ratio has been hovering around 44-47% since 2010 and has shown improvement under the Modi government.

 

Central Government Debt to GDP (%)

The above chart shows that the ratio has improved from 46.98% in 2013 to 45.11% in 2017. Similarly, the gross general government debt, which includes borrowings of both Central and State governments has hovered between 67-72% since 2010 and is expected to steadily decline until 2024.

Gross debt position (% of GDP)

Finance ministry, in a recent press release, commented on the government debt –

The overall liabilities of the Central Government are on a medium-term declining trajectory and Government’s Debt Portfolio is characterised by prudent risk profile. Government is primarily resorting to market-linked borrowings for financing its fiscal deficit. Conventional indicators of Debt sustainability, i.e., Debt/GDP ratio, interest payment to revenue receipts, shares of short-term Debt/External Debt/FRBs in total debt indicate that the debt profile of the Government is comfortably placed in terms of debt sustainability parameters and is consistently improving.

Under UPA, central government debt increased at a much higher rate

 While all reports and tweets by opposition leaders harped on the 49% increase in central government debt under Modi government, they conveniently forgot to compare it with what happened during UPA government. OpIndia analysis shows that the central government debt increased by 68% under UPA-I and 89% under UPA-II. Cumulatively, the debt more than tripled in 10 years of UPA. But why show the complete picture when half of it helps your propaganda?

Central government debt

When it comes to external debt (borrowings from foreign governments and institutions), the figure saw an increase of 443% under UPA-I, 60% under UPA-II and 0.04% under the Modi government. This underscores the statement from the Finance Ministry that the government is primarily resorting to market-linked borrowings to finance the fiscal deficit.

Thus, the number 49% is more hype and less substance. But it’s election season, so expect much more misleading news based on half-truths.

Help Opindia Reach Every Indian. Share This Post
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.


Big Story

A viral video has been shared several times on Social Media where a railway official can be seen taking money from a poor man travelling on the train.

2019 World Cup Is Here!

Catch the latest on Cricket World Cup as it unfolds, special coverage by Opindia

Proud to be a brand - Made in India?
Now, Advertise on Opindia

Who is Prime Minister Modi’s ‘very special friend’ who came to meet him in the Parliament today?

Prime Minister Modi today shared images with a 'very special friend' who had come to meet him at the Parliament.
Exclusive interview with BLF chief Dr Allah Nazar Baloch with OpIndia

Pakistan plundering Balochistan, we appeal PM Modi to support freedom struggle: Dr Allah Nazar Baloch of BLF speaks exclusively to OpIndia

Away from the glare of the world that often talks tall on Human Rights and the rights of the indigenous people, Balochistan bleeds at the hands of Pakistan. OpIndia interviews founder and chief of Balochistan Liberation Front, Dr Allah Nazar Baloch

Uttar Pradesh: After Triple Talaq, Man pressurizes wife to undergo nikah halala with his brother and uncle

Rabiya further stated that when she refused to give in to her husband's demands, she was thrashed and thrown out of the house.

Hey, New York Times, F**k you, again

India successfully tested anti-satellite missile today, springing it into the elite space club.

Senior citizen who used to put lizards in his own food on trains to get free meal caught by railway officials

A senior citizen named Surender Pal, in his 70s was found guilty of contaminating his own meal to get free ones from the national transporter
Donald Trump lies in the most foolish manner about PM Modi and the Kashmir issue

Had Donald Trump taken time to educate himself about world affairs before becoming President, he would not look foolish

For Donald Trump to lie about something so elementary as India's stand on Kashmir, only goes to show how terribly ignorant the President truly is.

Is there a concerted attempt to sow doubts against PM Modi among his most loyal base?

By now, everyone of us who is out there on social media is aware of this strange new phenomenon.

Live updates Karnataka Trust Vote: Karnataka Government has fallen

JDS-Congress government of Karnataka is facing their second floor test after assembly elections were held in May last year.

Himalayan Blunder : When India gave up on Tibet and what it needs to do now

During Rajiv Gandhi's 1989 visit to China, Deng Xiaoping had suggested: "Let both sides forget the unpleasant period in our past relations and let us treat everything with an eye on the future."30 years have since passed, however, the future is yet to arrive in India, Tibet and China relations.
Image Source: Moneycontrol

Karnataka Congress-JDS coalition government collapses after it fails to get trust vote passed in Assembly

After days of drama, CM Kumaraswamy finally moved the trust vote today that failed to pass in the Assembly. As a result, the Karnataka government has officially collapsed
Subscribe to Day's Top Stories
- Advertisment -

Latest articles

Connect with us

173,806FansLike
160,686FollowersFollow
74,950SubscribersSubscribe
Help Opindia Reach Every Indian. Share This Post