What Level of Public Debt Could India Target?
This paper discusses possible medium-term public debt targets for India, based on evidence from the economic literature on prudent levels of public debt and the feasibility for the country to meet a particular target over the next 5-6 years. While recognizing the challenges in determining an appropriate debt target, cross-country analysis and simulations suggest that a debt ratio in the range of 60-65 percent of GDP by 2015/16 might be suitable for India. Such a debt ceiling, while still above the average debt level for emerging markets, is within the range of debt ratios that would provide room for countercyclical fiscal policy and contingent liabilities. It would also send a strong signal of the government's commitment to fiscal consolidation by making a clear break with the past.
|Date of creation:||01 Jan 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: (202) 623-7000
Fax: (202) 623-4661
Web page: http://www.imf.org/external/pubind.htm
More information through EDIRC
|Order Information:||Web: http://www.imf.org/external/pubs/pubs/ord_info.htm|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises: A New Database," IMF Working Papers 08/224, International Monetary Fund.
- HÃ©lÃ¨ne Poirson & Luca Antonio Ricci & Catherine A. Pattillo, 2002.
"External Debt and Growth,"
IMF Working Papers
02/69, International Monetary Fund.
- Axel Schimmelpfennig & Nouriel Roubini & Paolo Manasse, 2003. "Predicting Sovereign Debt Crises," IMF Working Papers 03/221, International Monetary Fund.
- Bernheim, B Douglas, 1989. "A Neoclassical Perspective on Budget Deficits," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 55-72, Spring.
- Jonathan David Ostry & Abdul Abiad, 2005. "Primary Surpluses and sustainable Debt Levels in Emerging Market Countries," IMF Policy Discussion Papers 05/6, International Monetary Fund.
- David J. Smyth & Yu Hsing, 1995. "In Search Of An Optimal Debt Ratio For Economic Growth," Contemporary Economic Policy, Western Economic Association International, vol. 13(4), pages 51-59, October.
- S. Rao Aiyagari & Ellen R. McGrattan, 1994.
"The optimal quantity of debt,"
538, Federal Reserve Bank of Minneapolis.
- Gabriel Di Bella, 2008. "A Stochastic Framework for Public Debt Sustainability Analysis," IMF Working Papers 08/58, International Monetary Fund.
- Paul R. Krugman, 1988.
"Financing vs. Forgiving a Debt Overhang,"
NBER Working Papers
2486, National Bureau of Economic Research, Inc.
- Audrey Desbonnet & Sumudu Kankanamge, 2007. "Public debt and aggregate risk," Documents de travail du Centre d'Economie de la Sorbonne v07042, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.
- Reinhart, Carmen & Rogoff, Kenneth & Savastano, Miguel, 2003.
13932, University Library of Munich, Germany.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2011.
"The Forgotten History of Domestic Debt,"
Royal Economic Society, vol. 121(552), pages 319-350, 05.
- Reinhart, Carmen, 2008. "The Next (but not new) Frontier for Sovereign Default," MPRA Paper 11865, University Library of Munich, Germany.
- Carmen M. Reinhart & Kenneth S. Rogoff, 2008. "The Forgotten History of Domestic Debt," NBER Working Papers 13946, National Bureau of Economic Research, Inc.
- Barro, Robert J., 1974.
"Are Government Bonds Net Wealth?,"
3451399, Harvard University Department of Economics.
- Roberto Perotti, 1999. "Fiscal Policy In Good Times And Bad," The Quarterly Journal of Economics, MIT Press, vol. 114(4), pages 1399-1436, November.
- Stephan Danninger, 2002. "A New Rule: The Swiss Debt Brake," IMF Working Papers 02/18, International Monetary Fund.
- Cohen, Daniel, 1997.
"Growth and external debt: a new perspective on the african and latin american tragedies,"
CEPREMAP Working Papers (Couverture Orange)
- Cohen, Daniel, 1997. "Growth and External Debt: A New Perspective on the African and Latin American Tragedies," CEPR Discussion Papers 1753, C.E.P.R. Discussion Papers.
- Audrey Desbonnet & Sumudu Kankanamge, 2008. "Public debt and aggregate risk," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00175877, HAL.
When requesting a correction, please mention this item's handle: RePEc:imf:imfwpa:10/7. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jim Beardow)or (Hassan Zaidi)
If references are entirely missing, you can add them using this form.