Debt tripled under Modi Raj

deep said:
What's the worry if debt is in Indian currency?? Rather than printing and hence contributing to inflation they are borrowing in I Indian currency ..External debt is serious issue which is coming below as percentage of GDP ..
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There are two parts to your question. One is the Indian context. I won't be answering that because I have not kept myself informed on that.

The other is if large increase in internal debt is not that bad. Banks and Financial Institutions have a finite amount of money to lend. If the Government takes a large chunk of it, there is that much less for the private sector and consumers. So it can have an effect on growth. Also it decreases your credit rating and that will increase your cost of borrowing. And it also creates inflation and brings down the value of your currency. Making loans even costlier.
 
As foreign borrowing becomes more expensive (US interest rates are set to remain high for the foreseeable future), will India, or Pakistan for that matter, have access to or continue to avail themselves of such loans going forward, out of political or financial necessity?

With the tax net be sufficiently increased to decrease the need for such borrowing?
 
@kambhakt @deep & Others

What we need to see is the debt in relation to the GDP. On a long run basis our GDP nominal grows at about 11% (7% real, 4% inflation), Now in a 10 year period by compounding your GDP becomes about 2.9 times or thereabouts. So if your debt grows by just the same rate as your GDP, your debt will also become 2.9X or close to 3X.

It is plain mathematics, nothing else.

Regards
 
@FuturePAF

As foreign borrowing becomes more expensive will India, or Pakistan for that matter, have access to or continue to avail themselves of such loans going forward, out of political or financial necessity?

India borrows in the external market mainly to cover its CAD, not the government expenditure per se. Our total govt deficit is close to 9% now and our domestic savings rate is close to 30%, so essentially the govt deficit is covered by domestic savings.

Now under the Modi admin CAD has by and large remained between 1-2% and India gets FDI of close to 1.5% pa. So we dont really have an external financing gap as on date. India's total external debt of about USD 650 billion is almost matched by forex reserves of about the same amount.

Pakistan unfortunately is a different story altogether. I would let resident Pakistani experts like @VCheng sb and @Jango sb pitch in.

Regards
 
SoulSpokesman said:
@kambhakt @deep & Others

What we need to see is the debt in relation to the GDP. On a long run basis our GDP nominal grows at about 11% (7% real, 4% inflation), Now in a 10 year period by compounding your GDP becomes about 2.9 times or thereabouts. So if your debt grows by just the same rate as your GDP, your debt will also become 2.9X or close to 3X.

It is plain mathematics, nothing else.

Regards
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I have not been keeping touch with government loans so have not been commenting on that aspect. Do these loans include loans of government bodies like Railways and NHAI.
 
@kambhakt

Do these loans include loans of government bodies like Railways and NHAI.

As far as I know for Railways yes, NHAI no. NHAI has its own accounts and its own revenues (toll, asset monetisation)

Regard
 
SoulSpokesman said:
@kambhakt

Do these loans include loans of government bodies like Railways and NHAI.

As far as I know for Railways yes, NHAI no. NHAI has its own accounts and its own revenues (toll, asset monetisation)

Regard
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Are Indian railways profitable enough to be self sustaining?
 
@FuturePAF

Are Indian railways profitable enough to be self sustaining?

Not sure. As far as I know they are able to meet all their operational expenses out of revenues. But debt servicing and capex requires budgetary support, which gets included in Central govt deficit. I will try to get details.

Regards

PS; Same is true for NHAI too I think
 
@FuturePAF and others. Don't read too much into these numbers or debts about India, yes it is an obligation. But there is too much inside these numbers. The money borrowed by the government is only a percentage of it, although significant since it is a big entity, the direct obligation to pay for the Government is about $140-150 Billion. Being debt free is not an option for the government because our currency is a depreciating currency, the government can get loans at cheaper rate than the rupee depreciation, so, if the government becomes debt free, it actually pays more so it borrows and pays an interest. Then we have to consider soverign rating which India is at an investment grade, which allows the government to borrow at a lower interest rate. This is one of the reason why a country like Pakistan or Sri Lanka may find itself in trouble but India is less concerned about debt. This is a stat of debt situation, you can see the marked ones and see who is taking those debts. A bigger chunk of our debts are taken by corporations in India (although they come as national debt because they are Indian entities after all, and these debitors are in Indian jurisdiction. Hence these big numbers.

Debt.PNG
 
Vikramaditya1 said:
@FuturePAF and others. Don't read too much into these numbers or debts about India, yes it is an obligation. But there is too much inside these numbers. The money borrowed by the government is only a percentage of it, although significant since it is a big entity, the direct obligation to pay for the Government is about $140-150 Billion. Being debt free is not an option for the government because our currency is a depreciating currency, the government can get loans at cheaper rate than the rupee depreciation, so, if the government becomes debt free, it actually pays more so it borrows and pays an interest. Then we have to consider soverign rating which India is at an investment grade, which allows the government to borrow at a lower interest rate. This is one of the reason why a country like Pakistan or Sri Lanka may find itself in trouble but India is less concerned about debt. This is a stat of debt situation, you can see the marked ones and see who is taking those debts. A bigger chunk of our debts are taken by corporations in India (although they come as national debt because they are Indian entities after all, and these debitors are in Indian jurisdiction. Hence these big numbers.

View attachment 35259
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IMG_20240420_125658.jpg

@Joe Shearer


😅
 
@Vikramaditya1

Thanks. Most of the GOI debt in fact is relatively low cost long tenure debt taken from multilateral entities like WB and sovereign lenders like JICA. These are typically for funding infrastructure and social projects.

Regards
 
SoulSpokesman said:
@Vikramaditya1

Thanks. Most of the GOI debt in fact is relatively low cost long tenure debt taken from multilateral entities like WB and sovereign lenders like JICA. These are typically for funding infrastructure and social projects.

Regards
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That is one of the main complaints: that the government ran out of money, and resorted to borrowings to fund their spectacular infrastructure projects.

As you are an expert on the Sangh Parivar and its funding methods, you can obviously help the forum to understand how a contributor to Electoral Bonds to the extent of several times their eligibility (prior to the modification to the laws to permit this to be overcome) was awarded a mega-project several hundred times more than the Electoral Bonds amount itself. Naturally, as per the deft explanation offered, payment was to be from relatively low cost long tenure debt from multilateral entities like the World Bank, and sovereign lenders like the Japanese.

Your complete transparency and good faith in these narrations is touching.
 
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