Strategic depth of borrowing capacity

What is the institutional infrastructure through which the Union and state governments can expand borrowing in a special situation?

Topics
Indian Economy | GDP | public debt management agency

Ajay Shah 

Ajay Shah

The decline in gross domestic product (GDP) induced by Covid-19 has resulted in lower tax collections. Both the Union and the states are in need of greater debt. Enlarged deficits would assist the economy. Stop-gap solutions, like taxing petroleum products, have their own problems.

This requires a greater institutionalised capacity for borrowing by the Union and the states. It calls for the Public Debt Management Agency (PDMA), bond market reforms, phasing out financial repression, and stubbornly achieving small primary surpluses. Tax collections obviously depend on GDP. The income tax ...

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First Published: Sun, October 18 2020. 23:30 IST
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