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What Level of Public Debt Could India Target?, Petia Topalova, Dan Nyberg

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
Table Of Contents
Contents; I. Introduction; II. What is an Appropriate Public Debt Ceiling Target?; A. Theoretical Considerations; B. Empirical Evidence; C. Country Experience; III. What is an Appropriate Debt Target/Ceiling for India?; A. Sustainability of Public Debt; Text Tables; 1. Examples of Debt Ceilings; 2. Selected Emerging Countries: Average Growth-Interest Differential; B. Thresholds of Debt Intolerance; 3. Benchmark Public Debt-to-GDP Ratio: Sensitivity to Primary Surplus and Interest- Growth Rate Differential; 4a. Country Ratings, Public Debt Ratios and Clubs
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (28 p.)
Specific Material Designation
Form Of Item

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