Public Debt

The Indian budget was unveiled recently. Amongst other things, it talks about reducing the budget deficit from 6.9 percent of the GDP to 5.5 percent of the GDP.

This is heartening. The budget deficit essentially refers to the balance between spending and earning by a country in a fiscal year. So the less the deficit, the better it is. However, another parameter called the public debt is another matter altogether.

The public debt, also expressed as a percentage of the GDP, is the overall debt the country is in. The figure on the left indicates the public debt of the world. I have little respect for the fiscal policies of the US and the UK. Which is why, their public debt of close to 60% doesn't surprise me. However, what worries me is the stark difference between India and China. Our public debt is close to 40 percent whereas China is sitting comfortably at 10-20 percent.

The good thing about percentages is that they hide the reality a little. In absolute money terms, with a GDP 3 times as that of India, a ten percent deficit of China is almost similar to a 40 percent deficit of India. However, that shouldn't be a reason for joy.

I also noticed the grey colors in the map. Either they have non-existent GDP, no public debt or the data is not available. Considering that the countries seem to be West African ones or Mongolia, it seems to be a valid question :)