The Congress on Tuesday claimed that the country's debt increased by over 71 per cent in the last 5.5 years whereas the per capita GDP rose by only 30 per cent and asked the Modi government to address the concern in this budget.
Congress spokesperson Gourav Vallabh said the increase in the rate of per capita debt (10.3 pc) is twice as compared to the rate of per capita GDP (5.3 per cent) in CAGR terms.
"We ask PM and FM, there is no increase in income, no employment, no new investment. How will we bear the burden of this increasing debt? Also, why should the people of India bear the burden of the failures of the BJP government? In Budget of 2020-21, please address this concern," he told reporters.
"In the last 5.5 years, the country's debt has shown an increasing trend in terms of absolute amount. In March 2014, the total debt was Rs 53.11 lakh crore, whereas in September 2019 the same has increased to Rs 91.01 lakh crore. An increase of 37.9 lakh crore (71.36 per cent) in absolute terms," he said.
The Congress leader said the national debt per capita, which was Rs 41,200 in 2014, has increased to Rs 68,400 in 2019, an increase of 66 per cent in absolute terms and a CAGR increase of 10.3 per cent.
"The GDP per capita — USD 1,574 in 2014 — which is USD 2,041 in 2019, has increased only by 30 per cent and a CAGR of 5.3 per cent," he said.
This means for every rupee earned in 2014, the debt component was 43 per cent, whereas in 2019 for every rupee earned the debt has increased to 48 per cent, he claimed.
Vallabh said national debt is an important component for managing the finances of the government of any country, as debt is generally used to bridge the gap between available reserves and long-term expenditure towards development work.
"It is very critical for every government to ensure that the total debt is well within the required limits and efficiently used for development activities and to improve the overall standard of living of the people, while also ensuring that the same is used for productive purposes basis which the improvement in GDP enables the country to repay the debt well within the period of debt," he said.
The Congress leader said in 2010, the national debt to GDP was 65 pc, which has increased to 69.7 pc in 2019 and is estimated to increase to 70.1 pc by March 2020.
Further, going by the lower GDP numbers and significant decrease in direct and indirect tax revenue, the fiscal deficit is likely to go beyond the comfort levels. This will either result in the government not spending enough on development activity or overburden itself with further debt thereby putting additional pressure, he said.
The foreign exchange impact is also a factor that is haunting the government, he said, adding that since all our external debt is in USD terms, the debt per capita is continuing to rise and the brunt is being faced by the people.
He feared the impact of the increase in debt is the likelihood of government defaulting on its debt service obligation and therefore the RBI will have to raise the yield on newly issued treasury bonds to attract new investors.
"This potential increase in bond yields will force the RBI to also increase the interest rates thus pushing the already battered businesses to further deterioration," he said, adding that this will also lead to increase inflation as is happening currently, thereby reducing the purchasing power of the people.
"The current situation is a classic situation where growth is depleting very fast while inflation is rearing its ugly head once again and more importantly in order to address these type of crunch the Government has to resort to more and more stimulus which will only increase the debt further," he said.
Vallabh said it is already evident that the government has been grappling in paying its obligations and the reason for forcing the RBI to dip into its reserves for Rs 1.76 lakh crore was on account of inability to manage its resources.