AN EMPIRICAL ANALYSIS OF EFFECT OF PUBLIC DEBT ON ECONOMIC GROWTH IN INDIA IN THE POST-REFORM ERA
Journal Title: Asian Economic and Financial Review - Year 2016, Vol 6, Issue 11
Abstract
The present paper examines the causal nexus between public debt and economic growth for 15 NSC states of India for the period 1991-2015 using Dumitrescu Hurlin causality test. The panel causality test identified the endogeneity issue as it revealed the bidirectional causality between these two variables. Further, we revisited the effect of public debt on economic growth for NSC states for the same period by incorporating other controlled variables in the model. Understanding the potential endogeneity issue, we employed FMOLS which solves the endogeneity as well as serial autocorrelation problem in the model. The results of the present study revealed that public debt, total revenue receipts and total credit have favorable effect on economic growth. As regards policy implications, the government should adopt proper tax reform strategies to minimize tax leakages. Further, it should implement effective credit and risk management practices to improve the asset quality. Lastly, suitable debt management strategy should be adopted to utilize debt in the most effective and proficient way to expand productivity capacity of the economy. This, in turn, will sustain high economic growth in India.
Authors and Affiliations
Asit Mohanty| Chair Professor, Centre of Excellence in Fiscal Policy and Taxation (CEFT), Xavier Institute of Management, Xavier University, Bhubaneswar, Odisha, Suresh Kumar Patra*| Research Associate, Centre of Excellence in Fiscal Policy and Taxation (CEFT), Xavier Institute of Management, Xavier University, Bhubaneswar, Odisha, Satyendra Kumar| Research Associate, Centre of Excellence in Fiscal Policy and Taxation (CEFT), Xavier Institute of Management, Xavier University, Bhubaneswar, Odisha, Avipsa Mohanty| Ph.D. Scholar, Centre of Excellence in Fiscal Policy and Taxation (CEFT), Xavier Institute of Management, Xavier University, Bhubaneswar, Odisha
Keywords
Related Articles
- EP ID EP2313
- DOI -
- Views 525
- Downloads 38
DETERMINANTS OF NON-PERFORMING LOANS IN LICENSED COMMERCIAL BANKS: EVIDENCE FROM SRI LANKA
This study investigates the determinant factors of ex-post credit risk considering non-performing loans (NPLs) as proxy variable in Sri Lanka?s commercial banking sector and is carried out with a sample of nine licensed...
IMPACT OF MACROECONOMIC PERFORMANCE ON CORPORATE CASH HOLDINGS: SOME EVIDENCES FROM JORDAN
The paper presents empirical evidences of macroeconomic determinants of cash holdings using panel data of 65 non-financial firms listed in ASE during the period from 2000 to 2011. The results of this study find a partial...
Favorable and Unfavorable Conditions for Innovation: Some Cross Country Evidence
The paper employs cross country regression analysis to estimate the effect of democracy and income inequality, adjusting for the level of income and other variables, on country innovation. It finds that both of these var...
INVESTIGATING THE ROLE OF OIL PRICES IN THE CONVENTIONAL EKC MODEL: EVIDENCE FROM TURKEY
Being a developing country E-banking opened up tremendous opportunity to the financial sector and economic development of Bangladesh. This paper studies prospects of e-banking in Bangladesh, considering the performance o...
MODERATING EFFECT ON THE RELATIONSHIP BETWEEN A COMPANIES’S LIFE CYCLE AND THE RELEVANCE OF ACCOUNTING PRACTICES INTANGIBLE ASSETS
The main objective of this study was to investigate the relationship between the company and the value relevance of intangible assets during the life cycle before and after the implementation of the accounting standard N...