Capital, Credit and Commerce: Global Development Finance and India’s Role in the New Economic Order

Debt can finance productive public capital, deepen domestic securities markets and provide institutional investors with benchmark assets, yet the same liabilities can transmit global financial tightening, weaken monetary control and amplify sovereign-bank stress. This critical narrative review integrates research on sovereign-risk pricing, interest-rate transmission and debt-growth relationships in emerging economies. Literature published from 1981 to 2 June 2026 was selected through scholarly web searching of RePEc/IDEAS, National Bureau of Economic Research records, International Monetary Fund eLibrary materials, central-bank and institutional repositories, citation chaining, and verification against journal and Digital Object Identifier records. The evidence indicates that macroeconomic stability depends less on a single debt ratio than on a regime comprising currency denomination, maturity, creditor base, refinancing concentration, domestic financial depth, policy credibility, public-investment efficiency and exposure to global risk. Sovereign spreads combine domestic fundamentals with globally priced risk premia; their macroeconomic effect is strengthened when banks and firms hold or price against government debt. External monetary tightening affects emerging economies through exchange rates, capital flows, bank funding, sovereign and corporate spreads, and domestic policy responses, but the sign and magnitude vary with the shock's origin and recipient-country vulnerabilities. The debt-growth literature establishes a recurrent negative correlation at high or rising debt, but does not support a universal threshold or a context-free causal coefficient. Productive investment can offset financing costs when projects are well selected, efficiently executed and supported by credible medium-term fiscal adjustment; weak implementation, short maturities, foreign-currency exposure and adverse global conditions can reverse that result. The review therefore reframes debt sustainability as a dynamic portfolio-and-institutions problem rather than a numerical ceiling. Policy should integrate debt management, public-investment governance, monetary credibility, macroprudential regulation and contingency planning, while future research should identify state-dependent causal mechanisms using granular balance-sheet and project-level data.