Institute for Social and Economic Change

Established in 1972 by Professor V K R V Rao, ISEC is an All-India Institute for Interdisciplinary Research and Training in the Social Sciences

Is India’s Public Debt Sustainable? – isec

Is India’s Public Debt Sustainable?

Abstract

The paper assesses the sustainability of public debt in India based on historical time series data on non-monetized liabilities/GDP, revenue/GDP and expenditure/GDP of combined Union and State governments. The assessment based on unit root analysis of non-monetized liabilities/GDP, and co-integrating analysis of expenditure/GDP and revenue/GDP shows the sustainability of public debt, mainly on account of accelerating GDP growth, lower cost of government borrowing, favorable currency composition and longer maturity profile of debt.

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