Explain the reasons leading to higher Public Debt in India. Discuss the scope of public debt sustainability in India.
In short
Debt rose as persistent revenue deficits financed consumption, post-pandemic spending grew and slower growth pushed up the debt ratio. It stays sustainable if growth exceeds interest costs and primary deficits stay low, aided by longer maturities, lower coupon rates and an independent debt management office.
Model answer
Ghissu Editorial · Verified 4 Oct 2026 · 241 words
Fiscal Deficit and Revenue Deficit Trends
Persistent fiscal deficits, driven by revenue deficits financing consumption, increase debt; Andhra Pradesh’s revenue deficit quadrupled in 2022-23, and capital expenditure dropped sharply, limiting productive investment.
State Fiscal Health and Governance Issues
Andhra Pradesh’s 124 SPSEs with governance and arrears problems add contingent liabilities, raising fiscal risks.
Debt Maturity and Interest Burden
Longer weighted average maturity and declining coupon rates reduce rollover and interest risks, supporting sustainability.
Fiscal Consolidation and Revenue Mobilization
Andhra Pradesh’s own tax revenue projected to grow 28% in 2026-27 can improve fiscal space.
Institutional Reforms
Expert committees recommend an independent debt management office to reduce RBI conflicts and improve transparency.
Strengthen Debt Management and Fiscal Discipline
Establish a dedicated debt office and enforce stricter fiscal rules, focusing on Andhra Pradesh’s SPSE reforms.
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This chapter in the exam
Resource Mobilization in Indian Economy19 questions
Asked in 7 of 8 sittings since 2008
Most tested: Public debt and its sustainability in post-reform India.
- 2025Differentiate between internal and external public debt. Explain their relative advantages and risks for a developing country like India.
- 2025Discuss the key instruments of Monetary Policy (RBI) and Fiscal Policy in India and evaluate their role in resource mobilisation and inflation management.
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Question from the official APPSC Group-I Mains 2023 paper. Answer written by Ghissu's engine and checked against our editorial standards. Found an error? Tell us and we correct it within 48 hours.