The Growing Debt Burden Sensitivity analysis of the base projection is as follows: i) Budget deficit projection increased from 6 percent to 7 percent of the GDP. ii) Share of external borrowing to finance the budget deficit raised from 35 percent to 45 percent. iii) Rate of depreciation of the Rupee raised from 30 percent to 45 percent. The projected estimates of government debt in 2022-23 are given in Table 12.4. Table 12.4: Projections of the Level of Government Debt in 2022-23 under Different Assumptions GDP Rate of Size of Share of Total Growth Rate of Depreciation Budget Financing Government % of Rate Inflation of Rupee Deficit by Domestic Debt GDP (%) (%) (%) (% of Borrowing (Rs in Billion) GDP) (%) BASE -1 25 30 6 65 54,631 66.0 PROJECTION • Sensitivity -1 25 30 7 65 55,482 66.9 Analysis – I • Sensitivity -1 25 30 6 55 54,671 66.0 Analysis – II Therefore, under the base scenario, the projected government debt at the end of 2022­23 is Rs 54.6 trillion, equivalent to 66 percent of the projected GDP, as compared to 66.2 percent of the GDP in 2021-22. If the rate of depreciation of the rupee is significantly higher than the level of debt could reach 67 percent of the GDP, somewhat higher than the level in 2021-22. 12.5 A Medium-Term Budgetary Framework The base scenario for 2022-23 reveals that the level of government debt is likely to be close to 66 percent of the GDP, with the coverage of government debt corresponding to the definition in the Fiscal Responsibility and Debt Limitation Act. This Act also states that the ceiling on government debt is 60 percent of the GDP. The medium-term budgetary framework is developed for the years, 2023-24 and 2023-25, such that by the end of the latter year the government debt to GDP ratio comes down to 60 percent of the GDP as required by the Act. The macroeconomic assumptions for 2023-24 and 2024-25 are as follows: 123