"As the national debt per capita increases, the likelihood of the government defaulting on its debt service obligation increases, and therefore, the RBI will have to raise the yield on newly issued treasury bonds to attract new investors," said Congress spokesperson Gaurav Ballabh.
The party said when the UPA demitted office, the total debt was 53.11 lakh crore which went up to 91.01 lakh crore in September 2019.
"This reduces the amount of tax revenue available to spend on other governmental services because more tax revenue will have to be paid out as interest on the national debt."
Ballabh said for every rupee earned in 2014, the debt component was 43%, whereas in 2019 for every rupee earned, the debt increased to 48%. "In the last 5.5 years, per capita debt increased by Rs 27,200. The wealth of India's richest 1% is now more than 4 times the total of 70% poorest,"said Ballabh.
The Congress alleged that the shift in expenditures would cause people to experience a lower standard of living as borrowing for economic enhancement projects have become more difficult.
"The potential increase in bond yields will force the RBI to also increase the interest rates, pushing the already battered businesses to further deterioration. This may increase the inflation as is happening currently, thereby reducing the purchasing power of the people," said Ballabh.
"This a classic situation where growth is depleting very fast while inflation is rearing its ugly head once again. In order to address this crunch, the government has to resort to more and more stimulus which will only increase the debt further," he said.
( With inputs from IANS )