Each one of us owes debt of Rs 54,000.
Here's how
According to a Finance Ministry report, per
capita debt (calaculated on basis of Union Government debt) is at Rs
53,796 as on March 31, 2016, as against Rs 49,270 on March 31, 2015.
Each one of us has a debt of Rs 54,000. Wondering how?
Here’s
the answer. The government borrows funds from external agencies for
development purposes, which it divides by the total number of citizens
to get the per capita debt. Since the funds borrowed are for the people
and hence, the government calculates per person average cost. And this
is the debt that comes on each person’s head.
According to a
Finance Ministry report, per capita debt (calculated on basis of Union
Government debt) is at Rs 53,796 as on March 31, 2016, as against Rs
49,270 on March 31, 2015.
Analysts expect that the debt figure will only rise each year as the country’s development model is based on borrowing.
In
a reply to a question asked in Parliament on March 10, Minister of
State for Finance Arjun Ram Meghwal said that per capita debt has risen
by 9.2 percent in per capita total debt (internal and external debt) as
on 31st March 2016.
The per capita internal debt rose by 9.3 percent
while the per capita external debt increased by 5.1 percent in the same
period.
“The primary reason for the increase in debt has been
increase in government borrowings, majority of which has been due to
increase in internal debt, which contributes to 97% of total debt,”
Meghwal had told Lok Sabha.
The government has further asked for USD 9,432 million for developmental policies, he added.
This
includes assistance of USD 500 million for Pune metro project, USD 375
million for development of waterways, USD 500 million for skill
development, USD 400 million for development of Uttar Pradesh road
network and USD 500 million for Smart City project Why government borrows
The
government has to borrow to ensure smooth flow of its work. In a case
of fiscal deficit, the government has to borrow to meet demand for
crucial expenditures.
A major part of government’s revenue comes
from taxes, and when these earnings are not adequate, Centre and states
are allowed to borrow to bridge the fiscal deficit gap.
As of
March 2016, the general government debt (GGD) to gross domestic product
(GDP) stood at 68.6 percent, which means that the amount of debt was
68.6 percent of the GDP.
GGD is an indicator of the indebtedness of the government sector.
The
external debt is the outstanding amount of the actual current (not
contingent) liabilities that need to be repaid — either the principal or
interest amount —in the future and that is owned by the residents to
non-residents.
The government borrows from the World Bank, Asian Development Bank and International Monetary Fund for development purposes.
Internal debt, on the other hand, is debt owned by residents of an economy to other residents who lend funds to the government.
As
per the borrowings of central and state government, total debt is
calculated and then, the per capita debt is calculated. The total
outstanding debt of the government is divided by the total number of
residents to calculate per capita debt
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