Proceedings of the IBA IEA Conference on Economics and Public Policy (Ecofluence 2024)

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The Impact of Domestic Debt on Economic Growth of a Country

Authors
Srishti Shankar Yadav1, *
1PGDM Student, Indus Business Academy, Bangalore, India
*Corresponding author. Email: fpb2325.083.srishti@iba.ac.in
Corresponding Author
Srishti Shankar Yadav
Available Online 24 June 2025.
DOI
10.2991/978-94-6463-766-3_2How to use a DOI?
Keywords
Domestic Debt; Internal Debt; Fiscal Deficit; Economic Growth; Financial Stability; Inflation; Interest Rates; Crowding-Out Effect; Public Finance; Debt Management; Monetary Policy; Government Borrowing; GDP Growth; Private Sector Investment; Debt Sustainability
Abstract

Domestic debt is a key determinant of public finance as it provides governments with opportunities to finance deficits, cover capital expenditure projects such as infrastructure, and cushion economic stability. This paper analyses the effect of domestic debt on economic growth, inflation, and financial stability, with emphasis on India. Applying a thorough examination of macroeconomic statistics over the past 30 years (1995–2024), the study utilizes statistical and econometric methods, such as co-integration tests, Granger causality tests, and regression modelling, to measure the impact of internal debt on GDP growth. The results show that domestic debt has no statistically significant direct impact on economic growth but leads to financial instability when poorly managed. The research points to issues like deficits, interest payments, and crowding out of private sector investment. From these findings, the paper suggests a strong debt management strategies, enhanced fiscal responsibility, and measures to balance inflation management and interest rate stability. Through these interventions, policymakers can make the most of domestic debt use while reducing economic risks.

Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

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Volume Title
Proceedings of the IBA IEA Conference on Economics and Public Policy (Ecofluence 2024)
Series
Advances in Economics, Business and Management Research
Publication Date
24 June 2025
ISBN
978-94-6463-766-3
ISSN
2352-5428
DOI
10.2991/978-94-6463-766-3_2How to use a DOI?
Copyright
© 2025 The Author(s)
Open Access
Open Access This chapter is licensed under the terms of the Creative Commons Attribution-NonCommercial 4.0 International License (http://creativecommons.org/licenses/by-nc/4.0/), which permits any noncommercial use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license and indicate if changes were made.

Cite this article

risenwbib
TY  - CONF
AU  - Srishti Shankar Yadav
PY  - 2025
DA  - 2025/06/24
TI  - The Impact of Domestic Debt on Economic Growth of a Country
BT  - Proceedings of the IBA IEA Conference on Economics and Public Policy (Ecofluence 2024)
PB  - Atlantis Press
SP  - 7
EP  - 34
SN  - 2352-5428
UR  - https://doi.org/10.2991/978-94-6463-766-3_2
DO  - 10.2991/978-94-6463-766-3_2
ID  - Yadav2025
ER  -