Does debt convergence hold in case of India?

Akram, Vaseem and Rath, Badri Narayan (2019) Does debt convergence hold in case of India? Journal of Economic Studies, 46 (4). pp. 858-871. ISSN 0144-3585

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Abstract

The purpose of this paper is to examine the convergence analysis of public debt among Indian states using annual data from 1990‒1991 to 2014‒2015.The paper tests this hypothesis using club convergence technique propounded by Phillips and Sul (2007).The results reveal the existence of debt divergence for overall Indian states. States are formed into four clubs on the basis of their level of debt, and three clubs support the hypothesis of club convergence. Further, the total public debt decomposes into three compositions such as market loans, bank loans and loans and advances from the central government. The existence of convergence is found for market loans and bank loans; however, the presence of divergence is found in case of loans and advances for overall states.

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