Karachi, The International Monetary Fund (IMF) has issued a warning to India, stating that the nation’s government debt is likely to surpass 100% of its gross domestic product (GDP) in the medium term. This alarming forecast was part of the IMF’s annual Article IV consultation report, which also highlighted significant risks to India’s long-term debt sustainability.

According to Kashmir Media Service, the IMF’s report emphasized the substantial investments required for India to meet its climate change mitigation targets. Indian media outlets reported that these investments, necessary to combat climate change and increase resilience to natural disasters, pose a high risk to the country’s long-term financial stability.

The IMF indicated that India needs new, and preferably concessional, sources of financing to manage these challenges effectively. The report suggested that greater private sector investment and the implementation of carbon pricing or an equivalent mechanism are crucial for India’s economic health.

Additionally, the IMF warned of potential global economic slowdowns that could adversely affect India through trade and financial channels. It cautioned that further global supply disruptions might lead to recurrent commodity price volatility, exacerbating fiscal pressures for India.

Domestically, India faces risks from weather shocks, which could reignite inflationary pressures and lead to further food export restrictions. However, the report also mentioned a silver lining: stronger-than-expected consumer demand and private investment could potentially boost India’s economic growth.

The IMF’s warnings and recommendations highlight the intricate balance India must maintain to navigate its economic and environmental challenges in the coming years.