An Analysis of Domar's Interpretation of Debt Sustainability with Reference to Sub National Government Finances of India

Abstract

Public debt and its sustainability is an important issue and the literature envisage that the concept behind public debt and its sustainability has been formulated and developed by many researchers in the context of national and sub national level debt analysis. In the above context, this paper is an attempt to analyze the Domar Model of debt sustainability in details with reference to India. It observes that to achieve, solvency and sustainability the growth rate of public debt should be less then equal to Interest rate and interest rate should be less then Growth rate of GSDP ( ).