Please enable JavaScript.
Coggle requires JavaScript to display documents.
GOVERNMENT DEBT (Why government debt needs to be controlled? (Committee…
GOVERNMENT DEBT
Why government debt needs to be controlled?
Affects investor confidence
Affects credit growth
Fiscal repression of commercial banks
Inflation
Exchange rate risk
Committee Recommendations
N.K. Singh-headed FRBM (Fiscal Responsibility and Budget Management) Review Committee had recommended ratio to be 40% for the Centre & 20% for the States, respectively, by 2023, which is consistent with international best practices
Intergenerational parity
Has fiscal consolidation worked for the central government?
Gross fiscal deficit (GFD) as a % of GDP has declined from 5.9% in 2011-12 to 3.5% in 2017-18
Borrowing more from market
Moving towards market interest rates
Lowering interest rate volatility
Increasing debt sustainability
Strategy of central government for debt sustainability
Dedicated Body
Government has decided to setup a statutory Public Debt Management Agency (PDMA) to bring both, India's external (managed by Ministry of Finance) and domestic debt (managed by RBI) under one roof
Medium-Term Debt Management Strategy (MTDS)
Low cost of borrowing
Risk mitigation
Currency Risk
Roll-over risk
Commodity price risks
Interest rate risk
Market development