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Does Growth Lead to Debt Sustainability? Yes, But Not Vice-Versa! 55

across countries relative to the variation in average interest rates (Figure 5b). Thus, when taken
together, both the within-country and across-country variation clearly imply that the variability in
IRGD depends primarily on variation in g. Thus it is important to examine the dynamics of debt
sustainability for high growth economies separately from that for low growth ones.
2.10 On analyzing the averages of real interest rate, real growth rates and IRGD for the period
1990-2018 across selected emerging and advanced economies, it can be seen that India – as one
of the high growth economies – is amongst the countries having negative average IRGD, along
with other countries such as China, Russia and Singapore (Table 1). This can also be seen from
Figure 6 which shows that since 2003, India’s IRGD has been negative and the lowest for the
major OECD economies.

Table 1: Averages and Variability of Real interest Rates, Real Growth Rates and iRGD
for the Period 1990-2018

r g r-g
Average Median SD Average Median SD Average Median SD
Canada 3.3 3.4 2.2 2.3 2.7 1.8 1.0 0.8 3.2
China 1.9 2.4 3.5 9.6 9.4 2.3 -7.8 -6.7 5.2
india 2.6 2.8 2.6 6.5 6.6 2.1 -3.9 -3.6 3.5
indonesia 5.2 6.5 7.6 5.0 5.4 3.9 0.1 1.2 5.7
italy 4.8 3.8 2.5 0.7 1.3 1.8 4.1 3.0 2.9
Japan 2.7 2.9 1.4 1.0 1.2 1.8 1.7 1.1 2.1
Russia 0.2 -0.3 9.2 1.0 2.2 6.5 -3.2 -4.6 13.0
Singapore 4.3 4.3 2.4 5.9 6.0 3.8 -1.6 -1.9 5.4
uK 1.9 1.8 2.8 2.0 2.4 1.7 -0.1 -0.1 2.9
uS 3.7 3.1 2.0 2.5 2.8 1.6 1.2 0.8 2.0

Source: IMF, RBI, World Bank (SD-Standard Deviation)

Figure 6: Comparison of iRGD for india with other countries over the last 25 years

Source: IMF, RBI, World Bank