Contingency Liability Management: A Study on India (Commonwealth Secretariat Debt Management Series)

The sharp increase in the contingent liabilities of many countries in recent years and the change in the nature of the financial burden of the fiscal authorities have been primarily attributed to the transformation of the role of the state from a supplier of certain services to a facilitator, where the state extends guarantee to the private sector for providing services.
Contingent liabilities featured prominently in the recent Asian crisis and stressed the need for countries to develop a framework to monitor these liabilities. However, despite the need to quantify contingent liabilities as a way of avoiding financial crisis, very few countries have developed a framework to monitor these liabilities. This report focuses on some of the issues germane to the identification, monitoring and valuation of external-sector related contingent liabilities. By focusing mostly on external-sector related contingent liabilities that involve possible financial transactions with non-residents in India, it develops a useful framework for use by other countries.
This is a pioneering document in an area generating a lot of interest.