The openness of the Indian economy has been accompanied by improvement in India’s external position as the debt to GDP ratio fell from about 29 per cent in the 1990s to 19 per cent in the recent period. The debt service ratio has also declined from 25 per cent to under 5 per cent during the period (Table 4).
The unemployment rate declined by about ¾ percentage point this past year, consistent with the observation that growth was above trend. Most estimates would put the actual unemployment rate at the end of the year perhaps ¾ percentage point below the NAIRU. The picture that emerges is of an economy operating above its point of sustainable capacity and growing beyond its sustainable rate.