India, Jan. 26 -- Recently, the International Monetary Fund (IMF) has forecast that India's general government debt - it comprises the debts of the Centre and states - will overshoot 100 per cent of the GDP (gross domestic product) by the financial year (FY) 2027-28. Responding to this, the Ministry of Finance (MoF) clarified that this wasn't under a 'baseline scenario' - a jargon to describe normal economic conditions. It added the IMF was referring to a 'worst-case scenario' wherein a global shock would equally affect all countries.

Is the government's debt sustainable?

The government's debt is linked with how it manages its total expenditure vis-a-vis its total receipts or fiscal deficit (FD) which is excess of the former over the la...