How will policymakers deal with soaring public debt?

The economic slump and the government’s fiscal response are driving a sharp rise in public debt in India. There is no immediate threat given low-interest rates and the likelihood that nominal GDP growth will rebound from next year. But in coming years policymakers are likely to rely more heavily on financial repression to keep a lid on borrowing costs, which may undermine trend growth. And the priority being given to stabilising debt over boosting demand will hold back India’s economic recovery.