Millennium Post

Huge economic debt is a worry

A clear indication that the Indian economy is in a worrying mess is the huge debt of 172 billion which the country has to pay by March 2014. With India’s short-term debt maturing within a year, it
stands at the above mentioned figure at the end of March 2013. Their have already been news of unhealthy economic developments with deteriorating key external debt and macro indicators as reflected by the weakening currency as was seen in its fall to an unprecedented low this week. India has accumulated a huge short-term debt after 2008 and the figure has gone up more than three times also because of the unprecedented widening of the current account deficit (CAD) from roughly 2.5 per cent in 2008-2009 to nearly five per cent in 2012-2013. Unfortunately, much of this expanded CAD has been funded by debt flows. There has been gross mismanagement of the Indian economy by the Congress-led United Progressive Alliance (UPA) government. It is a fact that when the economy grows, the UPA takes credit but when it plunges, it blames it on global factors, drawing attention away from the gross mismanagement and willful neglect of the economy.

The collapses on the stock exchange, the free fall of the rupee, the flight of foreign capital, the lack of confidence in corporate boardrooms across the country, the double digit consumer inflation are
wrecking the Indian economy and are placing a huge burden on the Indian people. It is as if it is claimed that the government with its flawed policies had no role in creating the economic crisis. Global factors had played, but only a negligible role, in aggravating the current economic mess. It is only sustained mismanagement and arbitrary policies, especially in relation to taxation, particularly of foreign companies operating in India, which has contributed immensely to the sharp downturn in the growth rate. The government’s policies are likely to induce the flight of foreign capital from the debt and share markets. While our foreign debt has been rising continuously the payment
deficit is becoming acute exposing the country to a burden of repayment. Such a huge foreign debt can trap the country into impossibility of repayment of interest and principal. Inability to make payments push the country into further debt with liabilities are not receding at all but rising further.
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