A STUDY ON THE FISCAL SUSTAINABILITY OF PUBLIC DEBT IN INDIA FROM 1990 to 91 and 2020 to 21

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A STUDY ON THE FISCAL SUSTAINABILITY OF PUBLIC DEBT IN INDIA FROM 1990 to 91 and 2020 to 21

Author: Dr.S.S. Mahalakshmi and Dr. Seelam Ravi

Published On: 2024-11-11

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Abstract

India’s public debt level is a crucial concern, primarily due to a rising debt-to-GDP ratio that potentially hinders private investment. The government’s market borrowing to service this debt may lead to higher interest rates, underscoring the need for debt sustainability to support stable economic growth. However, India’s debt remains manageable due to favorable growth prospects and the limited role of external debt in its portfolio, as nearly all government debt is at fixed interest rates. The predominance of internal debt helps contain vulnerability, yet the crowding out of private sector borrowing by public sector debt raises concerns over external vulnerability. Additionally, inadequate fiscal adjustments pose a significant risk to long-term debt sustainability in India.

Key Words: Public Debt, Fiscal Sustainability, Central Liabilities, GDP, Growth

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