This document has the double purpose of providing information regarding the strategic and institutional guidelines under which the Federal Government manages its public debt and of presenting the public debt policy incorporated in the Economic Program for 2006.
The document is structured as follows. Chapter 1 presents briefly the general objective of public debt policy, which is based in the minimization of financial costs, subject to a prudent level of risk. It also describes the coverage of this strategy and the legal framework related to public debt management.
India is in a phase of rapid economic and demographic transition. Per capita income has been rising steadily since the 1980s. Life expectancy is increasing and birth rates are falling. The impressive growth rates of the 1980s were maintained in the last decade with reforms to open up the Indian economy. Poverty levels continue to decline as does the incidence of malnutrition and stunting. A key feature of this remarkable period of growth has been the change in the nature of the Indian diet. As the world economy becomes more integrated and communication faster, diet transition would have been inevitable. But it is clear that during the most recent decade globalisation has played an enormously important role in the transformation of food consumption patterns of Indian households. This is particularly evident in urban areas. The change in consumer tastes and demand has critical implications for the whole food supply system.
The present paper looks at the impact of globalisation on both the demand side and the supply side of the food system in India. Pingali (2004) has identified six key stylised facts characterising the changes in food demand in Asia. These facts pertain to changes in the consumption of rice, wheat, protein and energy-dense foods, and diet diversification. We explain these facts by identifying a two-stage process of diet transformation. During the first stage consumers move away from inferior goods to superior foods and substitute some traditional staples with primary food products that are more prevalent in western diets.
In the 1990s and most notably during the Asian crisis in 1997-98 a number of countries experienced problems in the banking sector and simultaneously in the balance of payments. The literature soon created the term "twin crisis" to describe this phenomenon which induced extensive research on the possible causal links between these two types of crises. Far less attention has been turned to a second type of twin crisis, a simultaneous currency and sovereign debt crisis. So far the extensive literature on currency crises and sovereign defaults has treated these two types of crises as separated issues.
The basic question of the sovereign debt literature was why governments repay their debt at all. There are only few legal institutions to apply or sanctions to impose for creditors to enforce their claims. The common answer is that governments repay their debt because they want to avoid a loss of reputation that would make it impossible or at least very expensive to issue new debt in the future. Recent research has focused on the question whether sovereign debt crises are mainly driven by economic fundamentals or private creditors’ default expectations.
