New Delhi, Dec 15 (IANS) The government will focus more on debt management compared to its current focus on fiscal deficit for the next few years, as there is a “huge overhang of public debt”, Economic Affairs Secretary Subhash Chandra Garg said on Saturday.
Speaking at the Annual General Meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI) here, he noted that credit rating agencies give significant weightage to the debt-to-GDP ratio of a country.
By comparing what a country owes with what it produces, the debt-to-GDP ratio indicates its ability to pay back its debts. Currently, India’s debt-to-GDP ratio is around 70 per cent.
“We still have overhang of a very large debt, of public debt especially. Maybe in next four to five years, that is the area we will focus. Most credit rating agencies and otherwise give a lot of weightage to the debt-to-GDP ratio in the country.
“We focus more on the fiscal deficit currently, but going forward that (public debt) is the area that we will focus,” the Secretary said.
Fiscal deficit of the country, he said is close to 3 per cent, a level considered to be reasonably ideal.
On inflation rate, he observed that India has “more or less conquered” rise in prices.
“Things can go wrong because of external factors, like oil which we don’t have in our control. But I think we are reasonably assured that inflation is less of a worry going forward.”
Talking about the country’s economic situation, Garg said the number of people engaged in the agriculture sector should come down to around 10 per cent for the country to prosper.
“We have so much or so many people still trapped in agriculture. Any economy where 55 or 65 per cent of the people are dependent on agriculture is not going to be large, rich and prosperous. Globally now, agriculture mostly employs only about 5 or 6 per cent of the people.
“I don’t think more than 10 per cent of India’s population should remain employed in agriculture,” he said.
The government will have to plan and ensure that farmers and agriculture labourers shift to the services and manufacturing sectors, along with the new digital economy.
Speaking to reporters on the sidelines, Garg, who is also an RBI Board member, said that the Reserve Bank’s Board meeting held on Friday discussed on the apex bank’s governance structure, liquidity and credit issues, among others.
The Secretary further said that the meeting did not discuss the issue of RBI’s economic capital framework and interim dividend.