How is Indian Sovereign Debt Different ?

Unlike the West, most of Indian Government Fiscal Deficit is financed by internal holdings. India is the only one emerging market amongst the high-government deficit countries in 2009 – India. And India, with a gross general government debt to GDP ratio of over 80 percent during 2009 (see IMF(2010)), is much better able to manage a more than 10 percent of GDP general government deficit, because during 2009 it had a growth rate of nominal GDP of around 11.5 percent and most of its public debt is denominated in domestic currency and held domestically.

It remains true, of course, that India, unlike most other leading emerging markets at the moment, is highly vulnerable to a sudden weakening of nominal GDP growth, which could cause its public debt-GDP ratio to rise sharply unless its underlying government deficit is reduced

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