Take a look at where India stand in terms of Debt-to-GDP ratio as compared to other major economies!
Debt-to-GDP ratio is an extremely important metric as it helps to gauge a country’s ability to pay back its debt. The GDP is taken into this ratio because it is the revenue base for any government. The government’s revenue (taxes) is based on the GDP of the country. It is calculated as a percentage of GDP.
Theoretically, the higher is the ratio the higher is the risk of default for countries. But in the real world that has not been the case till as both Japan and the US have debt that is higher than their respective GDP.
In the recent publication, the IMF has stated that the fiscal response from G-20 countries has been higher compared to the global financial crisis. As a result of the pandemic and the economic consequence, the world’s global debt is estimated to increase 13 percentage points to 96.4% of GDP in 2020 as against 83.3% in 2019.
The Advanced Economies Debt is expected to increase to 122.4% of GDP as against 105.2% and emerging economies debt is expected to increase to 62% in 2020 as against 53.2% in 2019.
Below is the expected increase in Debt to GDP ratio of select countries.
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