Despite higher fiscal deficit levels since the global crisis, the debt levels as percentage of GDP have not increased. In fact liabilities (of the centre and states) as percentage of GDP have declined from 71.4 percent in 2007–08 to 64.3 percent in 2010–11. High inflation and associated higher growth in nominal GDP has contributed to this moderation.
This extraordinary program—known as quantitative easing, or QE—helped lower borrowing costs for households, businesses and governments by putting downward pressure on lending rates. Since last October we’ve been gradually reducing the pace of our QE purchases to provide the appropriate amount of stimulus as circumstances evolve.