TIWN
New Delhi, July 21 (TIWN) The economic turbulence due to Covid-19 is expected to push India's debt-to-GDP ratio higher, according to a SBI Ecowrap report on Monday. Together with the declining GDP growth, debt-to-GDP ratio has been adversely affected in all countries.
"In the current situation, our nominal GDP growth is likely to contract significantly and based on this, our interest growth differential will turn positive in FY21, thus raising serious questions on debt sustainability."
In the current situation in India, said the report, both the key interest rate and GDP are expected to fall further. Our nominal GDP growth is likely to contract and based on this, our interest-growth differential may turn positive also.
Further, if interest rates are higher than expected, then the cost of rolling over a given debt increases.
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