Is India Overborrowed?

Abstract

In a conference devoted to the growth problems of heavily indebted countries, it would seen ironic to introduce a paper entitled ‘Is India Overborrowed?’. An answer that shades into a possible ‘no’ would sit awkwardly on many borrowing countries that are bemoaning past excesses for which they are now paying a heavy penalty. It would also run counter to the mainstream of Indian policy today which finds reinforcement for its traditionally self-reliant ideology by reference to these problems. Yet it may be possible that India is erring on the side of caution by borrowing too little: that a considered strategy of trade liberalisation financed by increased commercial borrowings could enhance the rate of growth. Given the external and internal conditions now, it could be the opportune time for restructuring of the economy, while utilising other countries’ experience to avoid the serious problems that can arise from improper borrowing.