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Economic growth and public debt - Tamilnadu
May 11 , 2024
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- The Economists C. Rangarajan and K.R. Shanmugam of the Madras School of Economics carried out the study by covering different facets of the State economy.
- Tamil Nadu’s public debt has neither “adversely affected” the growth nor “supported” it.
- This finding was with reference to the period from 2005-06 to 2022-23 when the public debt-Gross State Domestic Product (GSDP) ratio had a negative effect on real economic growth, but it was “not significant”.
- However, they cautioned that in future, a “higher debt ratio may adversely affect growth”.
- They also observed that “reduction in the debt-GSDP ratio may induce growth”.
- Analysing the pattern of the ratio over the years, in 2016-17 that the ratio had exceeded 20%.
- This is the sustainable level recommended by the Fiscal Responsibility and Budget Management (FRBM) Review Committee in 2017.
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