Outstanding Liabilities of the Central Government from 2016 to 2024

The total outstanding liabilities of the Central Government have shown a significant upward trajectory, more than doubling from ₹74.36 lakh crore in 2016-17 to ₹168.72 lakh crore in 2023-24 (RE). To put this growth in perspective, it’s crucial to understand that this increase occurred during a period that included the extraordinary circumstances of the COVID-19 pandemic, which necessitated higher government borrowing to support the economy. Looking at the composition of these liabilities, internal liabilities constitute the bulk of the government’s debt portfolio. Internal debt, particularly market borrowings, has been the primary source of government financing. Market borrowings have grown substantially from ₹46.49 lakh crore in 2016-17 to ₹102.51 lakh crore in 2023-24 (RE), reflecting the government’s increasing reliance on domestic markets for its funding needs. This preference for domestic borrowing helps minimize exchange rate risks and develops the local debt market.

External debt, while growing in absolute terms from ₹2.28 lakh crore to ₹5.37 lakh crore during this period, remains a relatively small portion of total liabilities (approximately 3-4%). This conservative approach to external borrowing helps insulate the government’s debt portfolio from international market volatility and exchange rate fluctuations. An interesting aspect is the growth in ‘Other Internal Liabilities’, which includes various small savings schemes and provident funds. This component has remained relatively stable, increasing modestly from ₹14.66 lakh crore to ₹16.73 lakh crore, suggesting a consistent base of retail savings supporting government borrowing. The government’s total assets have also shown steady growth, rising from ₹31.65 lakh crore in 2016-17 to ₹70.25 lakh crore in 2023-24 (RE). This growth in assets partially offsets the increase in liabilities and demonstrates the government’s investment in productive capacity.

A notable inflection point appears in 2020-21, when total liabilities jumped significantly from ₹102.19 lakh crore to ₹120.59 lakh crore, representing an unprecedented increase of about 18% in a single year. This spike coincides with the pandemic-related expenditure and reflects the government’s fiscal response to the crisis through increased borrowing. The historical debt of ₹300 crore due from Pakistan on account of pre-partition debt has remained constant throughout this period, representing an unresolved legacy issue that has minimal impact on the overall debt position. Looking at contingent liabilities (where data is available until 2017-18), we see these stood at ₹3.80 lakh crore, representing potential future obligations that could materialize under specific circumstances. The government’s prudent management of these contingent liabilities is crucial for long-term fiscal sustainability.

This evolving debt profile suggests that while the government has maintained a strategic preference for domestic borrowing and has successfully managed its external exposure, the overall increase in liabilities necessitates a continued focus on revenue generation and efficient asset creation to ensure long-term debt sustainability. The substantial growth in total assets alongside liabilities indicates that borrowed funds are being channelled into asset creation, which is crucial for economic growth and future debt servicing capacity.