chapter  5
31 Pages

Public debt sustainability and fiscal management in India


In the aftermath of the 2008/09 global financial crisis (GFC), severe income disparities and chronic fiscal imbalances have emerged as among the major risks facing the global economy (WEF 2012). As financial and capital markets have become more focused on fiscal risks, the prospects of debt sustainability in countries at all income levels have become a major concern of the policymakers. At the minimum, perceptions of unsustainable fiscal deficits and debt levels raise risk premiums for rolling over and for issuing public debt, thereby potentially crowding out growth and equity-enhancing use of budgetary resources.