Is Public Debt a Burden for India?

Bal, D P and Rath, Badri Narayan (2016) Is Public Debt a Burden for India? Economic Papers: A journal of applied economics and policy, 35 (2). pp. 184-201. ISSN 0812-0439 (In Press)

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In this paper, we investigated whether the government debt caused a burden for India over the period 1970-2013. We achieved this goal using Bohn's (1998) hypothesis in a structural VAR framework. This study did not find evidence to support Bohn's hypothesis in the context of India because no statistically significant relationship between public debt and gross primary deficit was found. Second, this study observed a positive response of interest payments due to the shock of public debt, which is not surprising. Third, a positive shock of public debt was statistically significant and negatively affected developmental expenditure. Similarly, interest payments negatively affected the gross primary deficit. We concluded that public debt in India was not a burden for the country.

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IITH Creators:
IITH CreatorsORCiD
Rath, Badri Narayan
Item Type: Article
Uncontrolled Keywords: public debt, interest payments, gross primary balance, SVAR model
Subjects: Social sciences > Business Finance
Arts > Liberal arts
Divisions: Department of Liberal Arts
Depositing User: Team Library
Date Deposited: 15 Sep 2016 05:29
Last Modified: 11 Sep 2017 06:54
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