Public Debt Management: Strategies for Pruning the Public Debt in India
Author : Dr. Rajeev Kumar
Abstract :
Sustainable levels of fiscal deficit and debt are crucial for the economic stability and predictable economic environment in a country. Excessive government debt and persistent fiscal deficits can have adverse effects such as higher interest payments, crowding out private investment, inflationary pressures, and reduced fiscal flexibility in times of economic downturns. Governments must strive to maintain fiscal sustainability through prudent fiscal policies, such as controlling spending, increasing revenues, promoting economic growth, and implementing structural reforms to improve fiscal efficiency. Indian government has taken a number of measures to lower the fiscal deficit and public debt. In order to lower the fiscal deficit, the government has prioritized fiscal consolidation. By limiting government spending and boosting revenue generation, the government has set goals to gradually reduce the deficit. As required by the Fiscal Responsibility and Budget Management (FRBM) Act, both the central government and state governments have been putting into practice a fiscal consolidation plan to gradually reduce the fiscal deficit. Further, to improve debt management procedures also, the government has taken action. This paper analyses trends in the government debt and deficits, efforts of the government towards fiscal prudence and fiscal consolidation and to develop a suitable strategy to prune burgeoning size of the public debt to sustainable level.
Keywords :
Public debt, fiscal deficit, debt sustainability, FRBM Act
