Policy Response to the Crisis in South Asian Countries
Surajit Das
Muttukadu
25/01/2015
South Asia: Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka
Graph: Growth Rates of GDP at Constant Prices in terms of respective national currencies.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: Growth rates of Maldives are measured along the secondary axis. 2014 figures are provisional.
Observation: There was a reduction of growth rate during 2008-2009 following the crisis, then there was a
recovery during 2010-2011 and then again there was another fall in growth rates during 2012-2013.
Chart 1: Growth Rates (In %)
15
20
13
15
11
10
9
7
5
5
0
3
-5
1
-1
2000
2001
Bangladesh
-3
2002
2003
Bhutan
2004
India
2005
Nepal
2006
2007
Pakistan
2008
2009
Sri Lanka
2010
2011
Simple Average
2012
2013
Average
2014
-10
Maldives
-15
Graph: Growth Rates of GDP at Constant Prices in terms of respective national currencies.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: Growth rates of Maldives are measured along the secondary axis. 2014 figures are provisional. The
broken line with black dots represents the average excluding Bhutan and Maldives.
Observation: There was a reduction of growth rate during 2008-2009 following the crisis, then there was a
recovery during 2010-2011 and then again there was another fall in growth rates during 2012-2013.
Chart 1: Growth Rates (In %)
15
13
11
9
7
5
3
1
-1
2000
2001
2002
2003
2004
2005
India
-3
2006
2007
2008
2009
2010
Average
2011
2012
2013
2014
Graph: Inflation based on GDP Deflator.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional.
Observation: There was an upward trend in inflation rate 2003 onwards (mainly due to rise in international
oil prices), which has soften in the recent past during 2012-2013.
Chart 2: Inflation Based on GDP Deflator (In %)
25
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-5
Bangladesh
-10
Bhutan
India
Maldives
Nepal
Pakistan
Sri Lanka
Simple Average
Graph: Inflation based on GDP Deflator.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional.
Observation: There was an upward trend in inflation rate 2003 onwards (mainly due to rise in international
oil prices), which has soften in the recent past during 2012-2013.
Chart 2: Inflation Based on GDP Deflator (In %)
25
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-5
India
-10
Simple Average
2011
2012
2013
2014
Graph: Lending Rate less the inflation based on GDP deflator.
Source: http://data.worldbank.org/, The World Bank.
Notes: The dashed average line with black dots represents the average excluding Bhutan and Maldives.
Observation: There was a downward trend in the real interest rates till 2010-2011, which has gone up
during 2012-2013.
Chart 2A: Real Interest Rates (In %)
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
-5
-10
Bangladesh
Bhutan
India
Sri Lanka
Maldives
Nepal
Pakistan
Simple Average
Average
Graph: Lending Rate less the inflation based on GDP deflator.
Source: http://data.worldbank.org/, The World Bank.
Notes: The dashed average line with black dots represents the average excluding Bhutan and Maldives.
Observation: There was a downward trend in the real interest rates till 2010-2011, which has gone up
during 2012-2013.
Chart 2A: Real Interest Rates (In %)
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
-5
India
-10
Average
2010
2011
2012
2013
Graph: Investment GDP Ratio (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Investment rates of Bhutan are plotted along the secondary axis. The
broken line depicts the average excluding Bhutan and Maldives.
Observation: Investment Rate remained more or less the same on an average. India and Pakistan have
registered a decline in investment ratio in the recent past following the financial crisis.
Chart 3: Investment Rate (In %)
50
70
45
60
40
50
35
30
40
25
30
20
15
20
10
10
5
Bangladesh
India
Maldives
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Bhutan
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Investment GDP Ratio (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Investment rates of Bhutan are plotted along the secondary axis. The
broken line depicts the average excluding Bhutan and Maldives.
Observation: Investment Rate remained more or less the same on an average. India and Pakistan have
registered a decline in investment ratio in the recent past following the financial crisis.
Chart 3: Investment Rate (In %)
50
45
40
35
30
25
20
15
10
India
5
Average
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Domestic Saving to GDP Ratio (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken line represents the average excluding Bhutan & Maldives.
Observation: Saving Rate has in fact gone up on an average. For India, relative to 2008, there was slight
increase during 2009-2010 then again the saving rate has declined during last three years or so.
Chart 4: Saving Rate (In %)
50
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-10
Bangladesh
Bhutan
India
Maldives
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Graph: Domestic Saving to GDP Ratio (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken line represents the average excluding Bhutan & Maldives.
Observation: Saving Rate has in fact gone up on an average. For India, relative to 2008, there was slight
increase during 2009-2010 then again the saving rate has declined during last three years or so.
Chart 4: Saving Rate (In %)
50
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-10
India
Average
2011
2012
2013
2014
Graph: Investment-Saving Gap as % of GDP.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. I-S gaps for Bhutan and Maldives are plotted along the secondary
axis. The dashed average line with black dots represents the average excluding Bhutan and Maldives.
Observation: I-S gap has gone up since 2003 till 2011 excepting in 2009. Big economies like India, Pakistan
and Sri Lanka have registered a decline in I-S gap in 2013.
Chart 5: Investment-Saving Gap as % of GDP
12
35
10
30
8
25
6
20
4
2
15
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
10
-2
5
-4
0
-6
-8
Bangladesh
India
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Bhutan
Maldives
-5
Graph: Investment-Saving Gap as % of GDP.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. I-S gaps for Bhutan and Maldives are plotted along the secondary
axis. The dashed average line with black dots represents the average excluding Bhutan and Maldives.
Observation: I-S gap has gone up since 2003 till 2011 excepting in 2009. Big economies like India, Pakistan
and Sri Lanka have registered a decline in I-S gap in 2013.
Chart 5: Investment-Saving Gap as % of GDP
12
10
8
6
4
2
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-2
-4
-6
India
-8
Average
2011
2012
2013
2014
Graph: Annual growth rate of index numbers of volume of exports of goods and services (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Bhutan, Maldives and Sri Lanka are on the secondary axis. Data for
Nepal is unavailable. The broken line depicts the average excluding Nepal, Bhutan and Maldives.
Observation: The average export growth rate has come down from more than 20% in 2007 to less than 0 in
2009; then it recovered during 2010-2011 and has come down again to near zero in 2012.
Chart 6: Export (Volume) Growth Rate
35
80
30
60
25
20
40
15
20
10
5
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-20
-5
-10
Bangladesh
India
Average
Pakistan
Simple Average
Bhutan
Sri Lanka
Maldives
-40
Graph: Annual growth rate of index numbers of volume of exports of goods and services (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Bhutan, Maldives and Sri Lanka are on the secondary axis. Data for
Nepal is unavailable. The broken line depicts the average excluding Nepal, Bhutan and Maldives.
Observation: The average export growth rate has come down from more than 20% in 2007 to less than 0 in
2009; then it recovered during 2010-2011 and has come down again to near zero in 2012.
Chart 6: Export (Volume) Growth Rate
35
30
25
20
15
10
5
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-5
-10
India
Average
2011
2012
2013
2014
Graph: Value of Exports of goods and services as proportion of GDP in national currencies (in %).
Source: http://data.worldbank.org/, World Bank. Bhutan, Maldives and Sri Lanka are on secondary axis.
Note: Bhutan, Maldives & Sri Lanka are on secondary axis. Broken average excludes Bhutan & Maldives.
Observation: The export-GDP ratio, on an average, came down following the crisis during 2008-2009 and
recovered during 2011-2012-2013 despite fall in growth rate of volume of exports. The value of export didn
not fall that much as compared to the fall in volumes either because of increase in the price of exportables
or because of the depreciation of the exchange rate or some combination of both.
Chart 6A: Export-GDP Ratio (In %)
40
120
35
100
30
80
25
20
60
15
40
10
20
5
Bangladesh
India
Nepal
Pakistan
Average
Bhutan
Sri Lanka
Maldives
Simple Average
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Graph: Value of Exports of goods and services as proportion of GDP in national currencies (in %).
Source: http://data.worldbank.org/, World Bank.
Note: Bhutan, Maldives and Sri Lanka are on secondary axis. Broken average excludes Bhutan & Maldives.
Observation: The export-GDP ratio, on an average, came down following the crisis during 2008-2009 and
recovered during 2011-2012-2013 despite fall in growth rate of volume of exports. The value of export didn
not fall that much as compared to the fall in volumes either because of increase in the price of exportables
or because of the depreciation of the exchange rate or some combination of both.
Chart 6A: Export-GDP Ratio (In %)
40
35
30
25
20
15
10
5
India
Average
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Graph: Annual growth rate of index numbers of volume of imports of goods and services (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Bhutan, Maldives and Sri Lanka are on the secondary axis. Data for
Nepal is not available. Bhutan and Maldives are excluded in the broken average.
Observation: The average import growth rate also came down during 2008-2009; then it increased during
2010-2011 and it has come down again to near zero in 2012-2013, when manufacturing remained stagnant.
Chart 7: Import (Volume) Growth Rate
40
60
50
30
40
30
20
20
10
10
0
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-10
-20
-10
-30
Bangladesh
-20
India
Average
Pakistan
Simple Average
Bhutan
Maldives
Sri Lanka
-40
Graph: Annual growth rate of index numbers of volume of imports of goods and services (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. Bhutan, Maldives and Sri Lanka are on the secondary axis. Data for
Nepal is not available. Bhutan and Maldives are excluded in the broken average.
Observation: The average import growth rate also came down during 2008-2009; then it increased during
2010-2011 and it has come down again to near zero in 2012-2013, when manufacturing remained stagnant.
Chart 7: Import (Volume) Growth Rate
40
30
20
10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-10
India
-20
Average
2011
2012
2013
2014
Graph: Value of imports of goods and services as proportion of GDP in national currencies (in %).
Source: http://data.worldbank.org/, World Bank. Bhutan, Maldives & Sri Lanka are on the secondary axis.
Observation: The import-GDP ratio, which was continuously increasing since 2003, came down in 2009
immediately after the crisis and then (in spite of fall in growth rate of import volume) increased again
during 2010 onwards in the recent years. Therefore, the value of import must have increased either
because of increase in (oil) prices or depreciation of the exchange rate or some combination of both.
Chart 7A: Import-GDP Ratio (In %)
50
120
110
40
100
90
30
80
70
20
60
50
10
40
30
Bangladesh
India
Nepal
Pakistan
Simple Average
Average
Bhutan
Sri Lanka
Maldives
0
20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Graph: Value of imports of goods and services as proportion of GDP in national currencies (in %).
Source: http://data.worldbank.org/, World Bank. Bhutan and Maldives are excluded in the broken average.
Observation: The import-GDP ratio, which was continuously increasing since 2003, came down in 2009
immediately after the crisis and then (in spite of fall in growth rate of import volume) increased again
during 2010 onwards in the recent years. Therefore, the value of import must have increased either
because of increase in (oil) prices or depreciation of the exchange rate or some combination of both.
Chart 7A: Import-GDP Ratio (In %)
50
40
30
20
10
India
Average
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Graph: International Oil Price (2005=100): Growth Rates of annual averages of monthly index numbers.
Source: Primary Commodity Prices, IMF.
Observation: Very similar pattern with the Import-GDP Ratio.
Crude Oil (petroleum), Price index, 2005 = 100, simple average of three spot prices; Dated
Brent, West Texas Intermediate, and the Dubai Fateh
Source: Primary Commodity Prices, IMF
200
180
160
140
120
100
80
60
40
20
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Current Account Deficit (in US$Billion). Positive means deficit and negative means surplus.
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The black line depicts the total figure of South Asia as a whole.
Figures for India, Pakistan and total are plotted along the secondary axis.
Observation: In absolute terms, the current account deficit of India as well as that of South Asia
continuously increased since 2003 till 2012, which has come down substantially in 2013 due to negative
growth in import volume and positive growth rate in volume of exports of goods and services.
Chart 8: Current Account Deficit in US$ Billion
5
100
4
85
3
70
2
55
1
40
0
25
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-1
10
-2
-5
-3
-20
Bangladesh
Bhutan
Maldives
Nepal
Sri Lanka
India
Pakistan
Total
Graph: Current Account Balance in US$ as proportion of GDP in current US$ (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The dashed average line with black dots represents the average
excluding Nepal, Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: On an average, the CAD-GDP ratio deteriorated sharply in 2008, then recovered during 20092010, then again the deficit increased during 2011-2012, finally it has shown some sign of recovery in 2013
Chart 8A: Current Account Balance as % of GDP
10
16
8
11
6
6
4
1
2
-4
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-9
-2
-14
-4
-19
-6
-24
-8
-10
-12
-29
Bangladesh
India
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Bhutan
Maldives
-34
Graph: Current Account Balance in US$ as proportion of GDP in current US$ (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The dashed average line with black dots represents the average
excluding Nepal, Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: On an average, the CAD-GDP ratio deteriorated sharply in 2008, then recovered during 20092010, then again the deficit increased during 2011-2012, finally it has shown some sign of recovery in 2013
Chart 8A: Current Account Balance as % of GDP
10
8
6
4
2
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-2
-4
-6
-8
-10
-12
India
Average
2011
2012
2013
2014
Graph: Foreign direct and institutional investment (in US$ Billion).
Source: http://data.worldbank.org/, The World Bank.
Notes: Figures for India, Pakistan and total are plotted along the secondary axis.
Observation: The foreign investment in absolute terms came down in 2008 but increased again during
2009-2010, then declined again in 2011 and increased again during 2012-2013 both for India and for South
Asia as a whole.
Chart 9: FDI Plus FII (In Billion US$)
2.0
70
60
1.5
50
1.0
40
0.5
30
0.0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-0.5
2013
20
10
-1.0
0
Bangladesh
Bhutan
Sri Lanka
Maldives
Nepal
India
Pakistan
Total
Graph: Foreign direct and institutional investment as proportion of GDP in current US$ (in %).
Source: Source: http://data.worldbank.org/, The World Bank and WEO Database, IMF.
Note: Foreign investment as proportion of GDP for Sri Lanka have been plotted along the secondary axis.
The broken average line represents South Asian average excluding Sri Lanka.
Observation: Foreign investment as proportion of GDP was increasing steadily till 2007, then it declined
sharply in 2008, then increased again in 2009, then declined again during 2010-2011, then increasing again
in the recent past during 2012-2013.
Chart 9A: FDI+FII As % of GDP
7
70
6
50
5
4
30
3
10
2
1
-10
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
-1
2013
-30
Bangladesh
India
Maldives
Nepal
Weighted Average
Simple Average
Bhutan
Sri Lanka
Pakistan
Graph: Foreign direct and institutional investment as proportion of GDP in current US$ (in %).
Source: Source: http://data.worldbank.org/, The World Bank and WEO Database, IMF.
Note: Foreign investment as proportion of GDP for Sri Lanka have been plotted along the secondary axis.
The broken average line represents South Asian average excluding Sri Lanka.
Observation: Foreign investment as proportion of GDP was increasing steadily till 2007, then it declined
sharply in 2008, then increased again in 2009, then declined again during 2010-2011, then increasing again
in the recent past during 2012-2013.
Chart 9A: FDI+FII As % of GDP
7
6
5
4
3
2
1
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
-1
India
Simple Average
2010
2011
2012
2013
Graph: Official Exchange Rate (Domestic currency per US$).
Source: Source: http://data.worldbank.org/, The World Bank.
Note: 2014 numbers are taken from various country specific sources. Data was not available for Bhutan
and that was not available for Nepal and Maldives for the last year.
Observation: There has been a secular depreciation of exchange rates of South Asian countries after crisis
Chart 10: Exchange Rate per US$
140
120
100
80
60
40
20
0
2000
2001
2002
Bangladesh
2003
Bhutan
2004
India
2005
2006
Maldives
2007
Nepal
2008
2009
Pakistan
2010
2011
Sri Lanka
2012
2013
Simple Average
2014
Graph: Foreign Exchange Reserves (in US$ Billion).
Source: Source: http://data.worldbank.org/, The World Bank.
Note: 2014 numbers are not available for Bhutan, Nepal, Maldives and Sri Lanka for the last year. Figures
for India and South Asian total are plotted along the secondary axis.
Observation: Excepting Pakistan, there has been a secular increase in foreign exchange reserves of all
South Asian countries. Reserves are being piled-up and exchange rates are being allowed to depreciate
continuously for maintaining international competitiveness. Exchange rate policy for boosting demand!
Chart 11: Foreign Exchange Reserves in Billion US$
25
400
350
20
300
250
15
200
10
150
100
5
50
0
0
2000
2001
2002
2003
Bangladesh
2004
Bhutan
2005
2006
Sri Lanka
2007
Maldives
2008
2009
Nepal
2010
Pakistan
2011
2012
India
2013
Total
2014
Graph: Combined government revenue as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: Following crisis, the revenue-GDP ratio came down during 2008-2009 both for India as well
as for the Asian countries on an average and it remained low till 2011, then it has shown some recovery
during last one or two years. However, excluding Bhutan and Maldives, the average ratio remained flat.
Chart 12: Government Revenue to GDP Ratio (In %)
23
50
21
45
19
40
17
15
35
13
30
11
25
9
Bangladesh
India
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Bhutan
Maldives
7
20
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Combined government revenue as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: Following crisis, the revenue-GDP ratio came down during 2008-2009 both for India as well
as for the Asian countries on an average and it remained low till 2011, then it has shown some recovery
during last one or two years. However, excluding Bhutan and Maldives, the average ratio remained flat.
Chart 12: Government Revenue to GDP Ratio (In %)
23
21
19
17
15
13
11
9
India
Average
7
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Combined government expenditure as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: The government expenditure went up for India only in 2008 before crisis due to pay
commission and farmers’ debt relief and it has continuously come down as proportion of GDP thereafter. It
is the same story for Asian average excluding Bhutan and Maldives.
Chart 13: Government Expenditure to GDP Ratio (In %)
30
60
28
55
26
50
24
45
22
20
40
18
35
16
30
14
25
12
Bangladesh
10
2000
2001
India
2002
Nepal
2003
2004
Pakistan
2005
Sri Lanka
2006
2007
Simple Average
2008
2009
Average
2010
2011
Bhutan
2012
2013
Maldives
2014
20
Graph: Combined government expenditure as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Nepal, Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: The government expenditure went up for India only in 2008 before crisis due to pay
commission and farmers’ debt relief and it has continuously come down as proportion of GDP thereafter. It
is the same story for Asian average excluding Bhutan and Maldives.
Chart 13: Government Expenditure to GDP Ratio (In %)
30
28
26
24
22
20
18
16
14
12
India
Average
10
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Combined fiscal deficit as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The dashed average line with black dots represents the average
excluding Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: The fiscal deficit as proportion of GDP increased during 2008-2009 both for India as well as
for South Asia, but this has been brought down continuously 2010 onwards.
Chart 14: Fiscal Deficit to GDP Ratio (In %)
11
22
9
17
7
12
5
3
7
1
-1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
-3
2
-3
Bangladesh
India
Nepal
Pakistan
Sri Lanka
Simple Average
Average
Bhutan
Maldives
Graph: Combined fiscal deficit as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The dashed average line with black dots represents the average
excluding Bhutan and Maldives. Bhutan and Maldives are plotted along the secondary axis.
Observation: The fiscal deficit as proportion of GDP increased during 2008-2009 both for India as well as
for South Asia, but this has been brought down continuously 2010 onwards.
Chart 14: Fiscal Deficit to GDP Ratio (In %)
11
9
7
5
3
1
-1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-3
India
Average
2011
2012
2013
2014
Graph: Accumulated liability of government as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Bhutan and Maldives.
Observation: The debt-GDP ratio has been brought down continuously since 2002-2003 excepting just one
year of 2008 both for India and, on an average, for South Asian countries for ‘debt-sustainability’.
Chart 15: Accumulated Combined Public Debt to GDP Ratio (In %)
120
100
80
60
40
20
Bangladesh
Bhutan
India
Maldives
Nepal
Pakistan
Sri Lanka
Simple Average
Average
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Graph: Accumulated liability of government as proportion of GDP in national currency (in %).
Source: World Economic Outlook Database updated in October 2014, IMF.
Notes: 2014 figures are provisional. The broken average line with black dots represents the average
excluding Bhutan and Maldives.
Observation: The debt-GDP ratio has been brought down continuously since 2002-2003 excepting just one
year of 2008 both for India and, on an average, for South Asian countries for ‘debt-sustainability’.
Chart 15: Accumulated Combined Public Debt to GDP Ratio (In %)
120
100
80
60
40
20
India
Average
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Summary Findings:
• Growth rates have come down
• Inflation has become moderate
• Real interest rate is increasing
• Aggregate demand in a depression
• Investment rate is reducing
• I-S gap is coming down
• CAD-GDP ratio increased but, reduced now
• Foreign investment reduced in between but, increasing now as % of GDP
• Exchange rate is depreciating
• Forex reserve is being piled up
• Revenue-GDP ratio is improving very slowly
• Government expenditure is coming down as proportion of GDP
• Fiscal deficit to GDP ratio is being brought down
• Public Debt-GDP ratio is being brought down
Conclusion:
• Contractionary fiscal and monetary policies have led to reduction in
the growth rate of aggregate demand both in India as well as in South
Asian countries on an average.
• Exchange rate policy is somewhat helping in demand management
through improvement in net exports and it seems, there is some
degree of coordination in this regard.
Policy Implication:
• We should come out of ongoing fiscal conservatism and undertake
expansionary fiscal policy. And also, it is high time to do away with
the obsession of ‘inflation targeting’ by pushing up the interest rate.
Thank you