Hindi English Translation || Editorial || Debt debate: On the IMF’s latest India consultation details, Finance Ministry’s response

Debt debate: On the IMF’s latest India consultation details, Finance Ministry’s response

The IMF’s sovereign debt risk assessment for India has spurred a sharp reaction

The Finance Ministry, last Friday, issued a statement titled ‘Factual (वास्तविक) position vis-à-vis IMF’s Article IV consultations with India’. For context, the International Monetary Fund (IMF), under its Articles of Agreement, holds bilateral (द्विपक्षीय) discussions with members, usually every year. IMF staffers collect economic and financial information, and discuss policies with top officials, before preparing a report that is discussed by the Fund’s executive board. The Ministry statement, four days after the IMF released its latest India consultation details, noted that “certain presumptions (अनुमान) have been made taking into account possible scenarios (परिदृश्य) that does not reflect factual position”. In particular, the Ministry was referring to an IMF view that adverse (प्रतिकूल) shocks could lift India’s general government debt to, or beyond 100% of GDP in the medium-term (by 2027-28). The Ministry asserted this was only a worst-case scenario and not a fait accompli, and emphasised (महत्व, बल) that other IMF country reports show much higher extreme ‘worst-case’ scenarios, for instance, at 160%, 140% and 200% of GDP, for the U.S., the U.K. and China, respectively.

The combined debt of central and State governments stood at 81% of GDP in 2022-23, from 88% in 2020-21. Under favourable circumstances, the IMF reckons (मानना) this could even go down to 70% by 2027-28. The shocks faced by India so far in this century were global, and affected the entire world economy, be it the 2008 financial crisis or the pandemic, the Ministry pointed out. Reacting to initial news flashes, it further clarified its statement was not a rebuttal (खंडन) to the IMF but “an effort to arrest misinterpretation (गलत अर्थ) or misuse” of its comments to imply that General Government debt would exceed 100% of GDP in the medium term. Semantics (Used to describe things that deal with the meanings of words and sentences) experts may argue whether the communiqué (विज्ञप्ति) was confrontational (टकरावपूर्ण) or clarificatory (स्पष्टीकरण). India’s Director on the IMF Board had already placed on record reservations about its staff’s conclusions on debt risks [“sounds extreme”], and some other aspects of the economy. In the broader picture, IMF staff’s perceptions of India’s fiscal (राजकोषीय) position have actually improved over the past year. From arguing in 2022 that India’s fiscal space is at risk, they now believe sovereign stress risks are moderate. This is in no small part due to the ability of the Centre, whose debt levels were about 57% of GDP last year, to meet fiscal deficit (घाटा) targets in recent times. Reducing debt and spends to stay the course on its commitment to bring the deficit to 4.5% of GDP by 2025-26 from an estimated 5.9% this year, is critical. While reacting to an adverse detail in a report sometimes ends up drawing more attention to it, actions tend to always speak louder than words.

Courtesy: The Hindu

Important Word List With Meaning

1.Factual (adjective)

Hindi Meaning - वास्तविक
English Meaning - Concerned with facts or contains facts, rather than giving theories or personal interpretations.

2.Bilateral (adjective)

Hindi Meaning - द्विपक्षीय
English Meaning - Negotiations, meetings, or agreements involve only the two groups or countries directly concerned.

3.Presumption (noun)

Hindi Meaning - अनुमान
English Meaning - The act of believing that something is true without having any proof.

4.Scenario (noun)

Hindi Meaning - परिदृश्य
English Meaning - A description of possible events.

5.Adverse (adjective)

Hindi Meaning - प्रतिकूल
English Meaning - Have a negative effect on something.

6.Emphasised (noun)

Hindi Meaning - महत्व, बल
English Meaning - It shows that something is very important or worth giving attention to.

7.Reckon (verb)

Hindi Meaning - मानना
English Meaning - To calculate an amount or value.

8.Rebuttal (noun)

Hindi Meaning - खंडन
English Meaning - A statement that a claim or criticism is not true.

9.Misinterpretation (noun)

Hindi Meaning - गलत अर्थ
English Meaning - The act of forming a wrong understanding of something that is said or done, or an example of a wrong understanding.

10.Communiqué (noun)

Hindi Meaning - विज्ञप्ति
English Meaning - An official piece of news or an announcement, especially to the public or newspapers.

11.Confrontational (adjective)

Hindi Meaning - टकरावपूर्ण
English Meaning - Tending to deal with situations in an aggressive way; hostile or argumentative.

12.Clarificatory (noun)

Hindi Meaning - स्पष्टीकरण
English Meaning - To make something clear or easier to understand by giving more details or a simpler explanation.

13.Fiscal (adjective)

Hindi Meaning - राजकोषीय
English Meaning - Relating to government finance and taxes.

14.Deficit (noun)

Hindi Meaning - घाटा
English Meaning - The state of having spent more money than has been received.

15.Semantics (noun)

English Meaning - Used to describe things that deal with the meanings of words and sentences.