New Delhi, Mar 27 (UNI) The United Nations Economic and Social Commission for Asia and Pacific(ESCAP) today expressed concern at India's high public debt, suggesting that the government's pace of revenue growth be maintained so that the country's debt carrying capacity can increase.
"In India, high fiscal deficits increased the combined debt of the Central and State governments from around 70 per cent of GDP in 1990 to about 87 per cent over 2002-04. Public Debt on the decline more recently, is estimated at 82 per cent for fiscal 2006," the survey says.
Mr Ravi Ramayake, author of the Report, said India's high level of public debt was a matter of concern adding that suitable policy interventions were needed to correct the imbalances, .
The event was also addresed by Ms Noeleen Heyzer, Under-Secretary General of the United Nations and Executive Secretary of ESCAP.
The survey says the Central governments share in public debt is much higher than that of State governments.
"The real burden of public debt is in servicing. In India, interest payments alone consumed more than 28 per cent of the revenue of Central and State governments in 2005, more if repayments of principal are included.
The sustainability of debt was crucially dependent upon the size of the economy and the growth rate. Therefore, policies promoting GDP growth should be vigorously pursued.
It says as budget deficits were a major cause of public debt adding that every effort shuld be made to maintain a primary surplus in the budget.
The survey notes that India under its Fiscal Responsibility and Budget Management Act has been able to bring down budget deficit in recent years. The pace of government revenue growth through the strengthening of tax administration and broadening of tax base must continue to rise so that the country's debt-carrying capacity can increase.
"Debt sustainability becomes an issue of growing concern when the growth of government interest payments exceeds that of government revenues," the survey adds.