In 2020, fiscal policy also contributed to mitigate falling economic activity and employment.
India’s debt to GDP ratio increased from 74% to 90% during the COVID-19 pandemic, the International Monetary Fund has said, noting that it expects this to drop down to 80% as a result of the country’s economic recovery.
Paolo Mauro, Deputy Director, IMF’s Fiscal Affairs Department told reporters at a news conference here on Wednesday, “In the case of India, the debt ratio at the end of 2019, prior to the pandemic, was 74% of Gross Domestic Product (GDP), and at the end of 2020, it is almost 90% of GDP. So, that’s a very large increase, but it is something that other emerging markets and advanced economies have experienced as well.”
“And, for the case of India going forward, in our baseline forecast, we expect that the debt ratio will gradually come down as the economy recovers. In our baseline forecast under the assumption of healthy economic growth in the medium term, we…