Debt Crisis and Economic Reforms

Any study of the growth of India 's external debt cannot be undertaken in isc tion from the growth of domestic public debt.
The question is whether the present economic reform will succeed in reversing the rising trends in debt service ratio and percentage of public and external debt to GNP in a sustainable fashion. An at pt is made here to answer the question with the help of a simple macro-economic model THE present economic reform in India has been triggered primarily by an external debt crisis, mainly an outcome of her domestic fiscal imbalance, i e, overspending by the government. Three years of this reform have already passed. The impact of some of the policies under this reform is now perceptible. There is a general feeling from the experience of other countries that for accessing the full impact of such policies, the three-year period is 'too short'. At the same time, it is felt that as far as mid-course corrections in the policy packages are required, it will be too late if their results are not detected in time.