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Contingent Liability Management

A Study on India

image of Contingent Liability Management
The sharp increase in the contingent liabilities of many developing countries in recent years and its possible implications has prompted a rethink in the way governments quantify their financial burdens.



This publication looks at some of the issues germane to the identification, monitoring and valuation of external sector contingent liabilities of India. By focusing mostly on externalsector related contingent liabilities that involve possible financial transactions with nonresidents, the document defines a framework for use in quantifying contingent liabilities, which can be adapted to other countries.



This publication is the second in a series produced by the Commonwealth Secretariat on debt and debt related issues.

English

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Contingent Liabilities Relating to Infrastructure Investment

Historically, infrastructure development in India has largely been carried out by the government because of long gestation periods, the lumpiness of huge capital, high incremental capital/outputs ratios (ICOR), high risk and low rates of return. As the government resources are limited and there are demands from other sectors, the government has allowed, since 1991, private participation including foreign investment in all infrastructure sectors, which were hitherto reserved for investment only by the public sector. However, it may be observed from Table 5.1 that in 1998, even after eight years of economic reform, the public sector still had the major share in investment and value added in mining and quarrying, electricity and other utilities, railways, telecommunications, banking and insurance.

English

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