Indian fiscal picture damaged by pension promises

India''s pension obligations are defined for the first time, saddling the government with a huge implied debt.

India's glitzy macroeconomic story has always been tempered by its chronic budgetary problems, with the government's explicit internal debt at 85% of GDP, plus a trade deficit of $30 billion in the year to May. Nonetheless, a rocketing stock market, rapidly rising inflows of foreign direct investment, and respectable GDP growth - along with a deep supply of well-managed, shareholder-friendly companies - has made India a trendy destination for foreign capital.

Its credit situation, however, must now be reassessed, thanks to a new study by New Delhi-based Invest India Economic Foundation, which makes the first stab at defining the government's pensions obligation.

Until now, analysts had...

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