Public debt and economic growth in India: A reassessment

Bal, D P and Rath, Badri Narayan (2014) Public debt and economic growth in India: A reassessment. Economic Analysis and Policy, 44 (3). pp. 292-300. ISSN 0313-5926

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This paper examines the effect of public debt on economic growth in India between 1980 and 2011. Using the autoregressive distributed lag ARDL model, the paper traces a long-run equilibrium relationship between public debt and economic growth. The error correction model (ECM) results show that central government debt, total factor productivity (TFP) growth, and debt-services are affecting the economic growth in the short-run, and that the results are consistent with our a priori expectation. It is recommended that the government should follow the objective of inter-generational equity in fiscal management over the long term in order to stabilize debt-GDP ratio, particularly, after the global financial crisis.

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IITH Creators:
IITH CreatorsORCiD
Rath, Badri Narayan
Item Type: Article
Uncontrolled Keywords: ARDL; Debt service; Domestic debt; Economic growth; External debt; TFP growth
Subjects: Social sciences > Business Finance
Divisions: Department of Liberal Arts
Depositing User: Team Library
Date Deposited: 05 Nov 2014 11:05
Last Modified: 11 Sep 2017 06:56
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