India’s government bond market has grown steadily—largely due to the need to finance the fiscal deficit—and is comparable to many government bond markets in emerging East Asia. At 36% of GDP, the Indian government debt market compares well with the markets of its neighbors (Figure 4). In absolute terms, however, given India’s greater overall size, the Indian government bond market is considerably larger than most other emerging East Asian markets (Table 2). The need to finance a large fiscal deficit has stimulated issuance and growth of the government bond market. Since 1992, deficit finance has relied increasingly on borrowing.
