External Debt and Economic Growth in India
Throughout the nineties, the Indian economy faced an adverse balance of payment (BOP) situation. To overcome the situation, India was required to lift its reserves by borrowing from the International Monetary Fund (IMF). External borrowing seems to be an important component in improving economic conditions, thus allowing a return to a normal state and reviving a struggling economy. It is believed that external debt helps to finance
productive investment and so contributes to economic growth. However, beyond a certain level, additional debt is likely to hamper economic growth. The objective of this paper is to examine the impact of external debt on India’s economic growth using the Ordinal Least Square analysis (OLS), on data spanning from 1990-91 to 2015-16.
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