Evaluating India's Debt Sustainability
XI Capital Markets Conference, 21-22 December 2012, Indian Institute of Capital Markets (UTIICM)
8 Pages Posted: 3 May 2013
Date Written: November 30, 2012
The world is currently in the throes of a sovereign debt crisis, which in its enormity far surpasses the Latin American crisis, which occurred two decades ago. The developed economies in an attempt to stimulate the economy during the recent recession adopted extraordinary measures both from the monetary and fiscal front. While infusing of surplus liquidity in the system to unfreeze the illiquid credit markets fell in the Central Banks’ domain, the governments adopted the Keynesian method of fiscal expansion to boost demand. However, this has led to the ballooning of fiscal deficits worldwide with unsustainable debt levels, particularly amongst the developed countries. At this juncture it would also be relevant to assess India’s fiscal situation and determine whether our medium term fiscal goals are achievable.
Keywords: Debt sustainability, fiscal space
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