India External Debt as a % of GDP Highlights in 2020
India’s external debt as a % of GDP hit 21.1% in 2020, an increase of 9.9% over the previous year. Between 2010 to 2020, India’s external debt as a % of GDP increased by 25.3%.
According to the IMF, government borrowings increased to 12.25% of its GDP in 2020 and gross debt shot up to 89.55% of its GDP. High pressure on government finances along with increasing deficits might pose a downside risk to fiscal policy in 2021.
The country's general government gross debt, as measured by the IMF, was 89.56% of GDP in 2020 as a result of the government's massive fiscal stimulus push to assist the most vulnerable people during the pandemic. Furthermore, net government borrowing increased from 7.4% of GDP in 2019 to 12.25% of GDP in 2020 during the pandemic, because of borrowing to aid economic recovery and procure vaccines. However, with a resurgence of COVID-19 cases in April May 2021, government finances have a bleak outlook for H2 2021.
Outlook on Global Economy
Real GDP is measured using inflation-adjusted base year prices. Real GDP changes are a measure of economic growth and show whether there has been an increase or decrease in the volume of economic activity.
According to real GDP, the world's top five economies are the United States, China, Japan, Germany, and India. After the US, China had the largest real GDP in 2021 with a value of $12.7 trillion in 2021. With a $6 trillion real GDP during the same period, Japan came in third place globally. Germany and India are the other two largest leading economies, with real GDPs of $3.8 trillion and $2.9 trillion, respectively.
Factors Affecting the Global Economy
A rise in COVID-19 cases:
As a result of Omicron, a new variant of COVID-19, more cases have been reported worldwide, resulting in the disruption of supply chain management. However, the global vaccination drive has reduced the fatality rate from the coronavirus.
Rising Inflation and Interest Rates:
As a result of rising inflation rates in both developing and advanced economies, central banks have been forced to tighten monetary policy and raise interest rates to keep prices from rising. However, a steady increase in interest rates could cause financial distress in some economies.
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