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Unlike many other emerging markets, debt ratios in India remain low and fallingover the years. While low debt ratios can be a conscious choice of firms in growthphase, firms in India seems to be deprived of the availability of credit through poorcredit market infrastructure and its development. Low debt ratios coupled with highertax rates entail higher tax payments by the firms in India. More importantly,government seems to rely heavily on these tax receipts to finance its fiscal expenditure.While development of debt markets would benefit the firms, it would seriously distortthe magnitude of fiscal deficit in India. The article here highlights this moral hazardwith government of India to develop debt markets in India
Journal | Indian Journal of Economics and Business |
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Publisher | Serials Publications |
ISSN | 0972-5784 |
Open Access | No |