Today's India is getting buried under the burden of debt

The debt of the government depends on its income and expenditure. If expenditure exceeds income then the government has to borrow or take a loan. This has a direct impact on the fiscal deficit of the government. The burden of so much debt that is being taken

Jan 18, 2024 - 21:52
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Today's India is getting buried under the burden of debt
Today's India is getting buried under the burden of debt


 today will not fall only on us and you. In the future, its burden will also fall on our children. If production in the economy does not increase, employment does not increase and the inequality between the rich and the poor does not reduce in our country, then you will have to take a loan. And this is unfortunate. If the government's debt is not reduced in the future, private companies will be forced to pay more interest. The investment will be reduced further. Understand it this way, if foreign debt increases in comparison to the economy, then the country's sovereign rating is affected. This may have a greater impact, especially on developing economies. If there is a default in repaying the loan, not only will the country's sovereign rating be affected, but it will also send a negative message to foreign investors and investments may fall. This will also affect industries and projects, which will reduce employment opportunities.

-Priyanka Saurabh


The Indian government and its states, which hold the title of the world's fastest-growing economy, have accumulated huge debt. If this is not reduced then we will not be able to take full advantage of this good opportunity. This debt started increasing even before the pandemic in 2019-20, which has not decreased since then. One reason for this high debt is that private companies are not opening their fists properly. They are investing less money in the economy. Banks and companies reduced their loans, which reduced private investment. For this reason, the government tried to expand the economy by investing more money and the debt kept increasing. If the government's debt is not reduced in the future, private companies will be forced to pay more interest. The investment will be reduced further. Understand it this way, if foreign debt increases in comparison to the economy, then the country's sovereign rating is affected. This may have a greater impact, especially on developing economies. If there is a default in repaying the loan, not only will the country's sovereign rating be affected, but it will also send a negative message to foreign investors and investment may fall. This will also affect industries and projects, which will reduce employment opportunities. Apart from this, if the loan defaults, it will become expensive to repay, which can also affect the government treasury and the government may be forced to cut the schemes run for the common man.

The debt of the government depends on its income and expenditure. If expenditure exceeds income then the government has to borrow or take a loan. This has a direct impact on the fiscal deficit of the government. We have been facing a revenue deficit in the budget since 1980. A revenue deficit means that your current expenditure is more than your revenue. Therefore, loans have to be taken to meet current expenses. Revenue loss means that you will not get returns on what you are borrowing for. Like expenditure on subsidy or defense. A large part of the budget is spent on these and then our debt keeps increasing. The burden of so much debt that is being taken today will not fall only on us and you. In the future, its burden will also fall on our children. If production in the economy does not increase, employment does not increase and the inequality between the rich and the poor does not reduce in our country, then you will have to take a loan. And this is unfortunate. Today's India is facing the 'problem of debt crisis'. This 'crisis' is understood not in terms of the volume of current debt but in terms of the larger trends and macroeconomic relationships between rising government (domestic, external, and corporate) debt and other macro aggregates (ranging from growth, employment, inflation to financial credit expansion). Should be seen as. The government will need to take serious fiscal consolidation measures to address these challenges, rather than ignore what the IMF has warned. International Monetary Fund has warned India about debt.

IMF fears that in the medium term, India's government debt may increase to such a level that it may exceed the country's GDP. This means the total government debt can be more than 100 percent of the country's GDP. Government spending driven by capital expenditure in the last three years has not allowed for more capital formation (to attract private capital investment for growth). The weak gross fixed capital formation figures reflect this. For me, this is a matter of even greater concern. If the government is spending big and borrowing more to attract/progressively pursue growth through private investment, and nothing is happening (private investment remains extremely weak), then the government is It is accruing more debt at the expense of actually spending. This is ruinous and jeopardizes the possibility of future useful borrowing for crisis or large-scale borrowing needs. The problem is that all this increased spending is leading to higher growth and is coming at the expense of social/welfare spending needed for human capital development. There is always the possibility of 'hidden debt' arising from fiscal deficit which is 'quietly hidden' and 'unaccounted for' in official statistics. In times of crisis, 'hidden debt' figures can ruin an economy.

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