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Debt-GDP ratio likely to head south, says Finance Ministry report

The country's debt-GDP ratio which stood at 66 per cent in the past fiscal is expected to show a downward trend, the government said in a report on Tuesday

"The debt-GDP ratio is likely to continue to trend downward in the years ahead," the finance ministry said in the third status report on the public debt position of the government released Tuesday evening.

In FY12, the country' debt-GDP ratio stood at 65.6 per cent, the report said.

According to the medium-term fiscal policy statement, the debt-GDP ratio of the Centre is expected to come down to 42.3 per cent by FY16.

The level of debt reflects the cumulative effect of government borrowings over time, which tends to be higher for a developing economy due to the need for creating adequate infrastructure.

The debt level went up consistently during the 1980s and 1990s and the combined debt-GDP ratio of the Centre and states reached a peak of 83.3 per cent by FY04. Thereafter, this has shown a secular decline.