Panch Tattva Wisdom

Public debt in large economies is primarily owed to domestic savers—households, pension funds, insurance companies—and to a lesser extent, foreign investors. In effect, the government borrows from its own citizens, and this debt later becomes a source of income during their retirement years.
Since meaningful savings are possible mainly for higher-income groups, countries with higher per-capita incomes naturally accumulate larger public debt. India, by contrast, carries relatively lower public debt partly because a large section of its population lacks the surplus income needed to lend to the government in financial form.
This mechanism, however, raises a serious distributional concern. The government’s taxing power is effectively used to convert the savings of the wealthy into a secure, state-backed income stream, while the burden of servicing that debt—through future taxes—is borne by the entire population, including those who were never in a position to save or lend.
When public borrowing finances productive investment and long-term growth, this transfer can be justified. But when debt is used to fund consumption or inefficient expenditure, it becomes a regressive arrangement—one in which today’s wealthier classes secure future income, while tomorrow’s taxpayers collectively foot the bill.