The International Monetary Fund (IMF) on Wednesday said that India's debt to Gross Domestic Product (GDP) ratio has increased from 74% to 90% during the coronavirus pandemic. However, the ratio may drop to 80% if the country's economy recovers, it added.

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Paolo Mauro, Deputy Director, IMF's Fiscal Affairs Department, said in a press conference that the ratio has increased largely, but it is something that other emerging markets and advanced economies have experienced as well.

"And, for the case of India going forward, in our baseline forecast, we expect that the debt ratio will gradually come down as the economy recovers," Mauro said.

Responding to a question, he said that the immediate priorities are to continue supporting people and firms, and, in particular, to focus on supporting the most vulnerable.

At the same time, it is important to reassure the general public and investors that public finance is under control and the way to do so is through a credible medium-term fiscal framework.

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"This year, India has already announced its budget. It continues to be accommodative. It continues to support health, and it continues to support people. Over the next years, it is quite likely that the deficit will be reduced in part as the economy recovers," he said.

More generally in emerging markets, the priority, given to the very large increases in inequality, given the large increases in public debt, is to mobilise revenues in the medium term, Mauro added.

Vitor Gaspar, Director of IMF's Fiscal Affairs Department, said that given widening deficits and contraction in economic activity, debt worldwide increased sharply to 97% of GDP in 2020.

It will increase slower to 99% in 2021 before stabilising below but close to 100% of GDP, he added.

In 2020, fiscal policy also contributed to mitigate falling economic activity and employment. It avoided falls on the scale of the great depression.

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Gaspar said that countries with better access to financing, countries with stronger buffers, countries with stronger fundamentals have been able to give more financial support during 2020. They can sustain that financial support for longer, and they have more options in terms of policymaking.

It is very clear when we focus on the group of emerging markets specifically, he said.

"So, speaking about emerging markets as a group, when looking at the current situation, ignore the need for fiscal policies to be tailored to fit the country's circumstances, which is a very important point to make. Clearly, there are risks.

"On occasion, we have turmoil or even turbulence in markets. When it is necessary to act to restore the confidence of markets and our membership, the IMF stands ready to act and has a financial capacity of about $1 trillion," Gaspar said.