Justify the view that public debt is essential for the development of Indian economy endowed with natural resources.

Counter-Cyclical Fiscal Role

The Economic Survey 2020-21 highlights India’s negative IRGD, justifying borrowing to sustain demand during crises like COVID-19. This counter-cyclical approach prevents long-term damage to productive capacity by maintaining government spending when revenues fall.

Growth-Linked Debt Sustainability

Andhra Pradesh’s 9.24% GSDP growth in 2024-25 outpaces interest rates, stabilizing debt-to-GDP ratios and enabling sustainable borrowing. Empirical evidence shows growth exceeding interest rates ensures manageable debt levels, supporting continued investment.

Risks of Overdependence

Andhra Pradesh’s 2022-23 revenue deficit quadrupling and capital expenditure decline show dangers of unchecked debt without fiscal discipline. Excessive borrowing can crowd out private investment and create inflationary pressures, undermining development goals.

Inclusive Growth

Debt funds welfare and infrastructure, raising per capita income above the national average in Andhra Pradesh. Public debt finances social programs and infrastructure that reduce regional disparities and improve human development indicators.

Fiscal Burden

Outstanding3 liabilities at 36% of GSDP in Andhra Pradesh highlight risks of high debt servicing costs. Rising interest payments divert resources from development, necessitating prudent fiscal management to maintain sustainability.