India faces high debt, but sustainable for now: NCAER director-general

At nearly 82 per cent of GDP, India's public debt is very high, but the country doesn't face debt sustainability issue on account of high growth rate and higher share of local currency debt, NCAER Director General Poonam Gupta has said.

Participating in an event organised by NCAER, Gupta said India's high debt levels are sustainable for now because of higher real or nominal GDP and as most of the debt is held in rupee.

The states together hold one-third of the total debt, and in the 'business as usual' situation, their debt levels will only increase further over the next five years, Gupta said.

"In a handful of states like Punjab and Himachal Pradesh, Debt-to-GDP ratio could increase by 50 per cent," Gupta said, adding that the states, including the most indebted ones, also don't face sustainability issue as they have implicit guarantee of the Centre and as states cannot hold debt in foreign currency or floating rate.

Drawing a comparison between Punjab, one of the most indebted ..