ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Public Debt in Perspective

SINCE the initiation of the stabilisation and structural adjustment programmes in June 1991, there have been repeated reminders from the finance ministry and the Reserve Bank that the level of public debt was becoming unsustainable. The latest annual report of the RBI presents a review of the domestic public debt and takes a similar line. Earlier, the government of India's Economic Survey for 1994-95 had presented a more comprehensive survey of the central government's internal and external liabilities. The RBI takes the centre's external liabilities as given in the annual budgets which are at historical rates of exchange a lacuna which the Economic Survey seeks to correct by estimating the government's external liabilities at current exchange rates. The correction is not a minor one, for the external liabilities so corrected and converted to current exchange rates (Rs 1,32,199 crore as of March 31,1995 or 14.5 per cent of GDP) work out to roughly three times the size of external liabilities measured at historical exchange rates (Rs 49,508 crore or 5.4 per cent of GDP). The RBI does present data on the country's total external liabilities at current exchange rates in which the figure of government borrowings from abroad broadly match the Economic Survey figure (Rs 1,35,252 crore). Both of these, however, are exclusive of the Russian rupee debt, in particular the defence debt, to the extent of Rs 27,603 crore as of March 1995. The Economic Survey also presents some estimates of average rate of interest borne by the central government on different kinds of domestic and external liabilities. In one respect, however, the RBI data have an edge over those of the Economic Survey in that the former cover the liabilities of the state governments as well.

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