Govt. Sinking the
country (India) into Debt Trap
The
country owed about Rs. 44.25 lac Crores at the end of March 2012 and it will
grow to about Rs. 48.15 lac crores at the end of current FU 2012-13.
|
|
2010-2011
|
2011-2012
|
2011-2012
|
2012-2013
|
|
|
Actuals @
|
Budget
|
Revised
|
Budget
|
|
|
|
Estimates
|
Estimates
|
Estimates
|
|
4.
Short term borrowings
|
7759
|
15000
|
116084
|
9000
|
|
5.
External Assistance (Net)
|
23556
|
14500
|
10311
|
10148
|
|
6.
Securities issued against Small Savings
|
11233
|
24182
|
-10302
|
1198
|
|
7.
State Provident Fund (Net)
|
12514
|
10000
|
10000
|
12000
|
|
8.
Other Receipts (Net)
|
-13315
|
-13866
|
-15862
|
2245
|
|
Total
|
367162
|
392816
|
546644
|
513590
|
|
Less
Repayment
|
147793
|
104927
|
123929
|
124302
|
|
Debt
increase
|
219369
|
287889
|
422715
|
389288
|
|
Add:
Debt B/F last year
|
3495452
|
3714821
|
4002710
|
4425425
|
|
Total Sovereign Debt
|
3714821
|
4002710
|
4425425
|
4814713
|
Total outstanding Sovereign Debt in 2004-05:was
Rs. 19,94,422 crore, The UPA Govt. continued to borrow and it went up to Rs. 34,95,452 crore in 2009-10.
That means they borrowed further Rs. 15.01 lac crores in five years, at an
average of over Rs 3.00 lac crores per year. UPA II has continued with its
borrowing spree – a political decision, and have further added (after repayment)
Rs.2.19 lac Cr in 2010-11, Rs. 4.22 lac cr in 2011-12 and will add Rs.
3.89 lac crore in the current year
2012-13. Thus on 31st March 2013 the
country will owe about Rs. 48.15 lac Crores.
Significantly, the Hon’ble Finance Manager takes big pride by claiming
that this colossal amount is only 45.31% of GDP whereas the 13th
Finance Commission has approved a target of 50.5%.
S. No.
|
F.Y.
|
Fiscal Deficit of Central Govt. % of GDP
|
1
|
2004-05
|
4.0
|
2
|
2005-06
|
3.3
|
3
|
2006-07
|
2.5
|
4
|
2007-08
|
6.0
|
5
|
2008-09
|
6.5
|
6
|
2009-10
|
4.9
|
7
|
2010-11
|
5.9
|
8
|
2011-12
|
5.1
|
9
|
2012-13 (Projected)
|
|
The
Personal Income tax and Service tax that Government recovers from all of us
is
insufficient to pay Interest on borrowings!
Rs.
Crore
|
Actual
|
.B.E.
|
Rev.BE
|
BE
|
|
2010-11
|
2011-12
|
2011-12
|
2012-13
|
Personal Tax
|
146587
|
172026
|
171879
|
195786
|
Service Tax
|
71016
|
82000
|
95000
|
124000
|
Total
|
217603
|
254026
|
266879
|
319786
|
Interest Payment
|
234022
|
267986
|
275618
|
319759
|
Short fall
|
16419
|
13960
|
8739
|
-27
|
Instead
of managing enormous national assets properly, efficiently and honestly,
Government is taking the easy course of raising Taxes and Borrowings.
Times
of India 26.4.2012
‘S&P cuts India
outlook to negative…
Our Finance Minister says “No
need for panic. The situation may be difficult,
but we will be surely able to
overcome. Pranab Mukherjee.
Really
No Need to panic Mr. Mukherjee; simply because the loans that you are raising
and sinking the country into a irretrievable Debt trap will not be paid by you;
they will be paid by our future generation.
You continue borrowing in which you have expertise. And continue to dole out huge national assets
to Big Business for pittance!
Sovereign
debt sustainability a political issue: Duvvuri Subbarao
(Governor RBI)
"Sovereign debt
sustainability is not like price stability. It is a political issue. How much
debt the government raises and how they raise that debt, are a political issue…
The Reserve Bank of India has
proposed a cap on the debt to GDP ratio as a high debt component in the economy
complicates monetary policy.
"Government
borrowing is not bad per se, but excessive borrowing is. There is therefore a
need to cap total public debt as a proportion of GDP" said governor D Subbarao delivering
a keynote address at a central bank's research conference.
" Like with the other two legs of the new trilemma,
even in the case of sovereign debt, there is an inflexion point beyond which
fiscal deficits militate against growth." he said.
India's public debt to its
GDP is currently estimated to be 65%, second highest among emerging markets
only after Hungary's. India's fiscal deficit has
risen the fastest among emerging market economies.
All our political
parties, at the Centre, in States, Municipal Corporations and in local bodies,
have made borrowing a State Policy. Debt
is a demon which you can create any time and of any size but once created you
can not put it back in the bottle. Look into the accounts – called Budgets, of
any Government body at any level, you will find Debt as a significant source of
‘Revenue
Receipt’ – easy way to raise money.
Initially the debt provides funds but soon the interest on it becomes so
much that borrowing becomes a necessity to pay Interest on it. Own income falls short to pay even the
interest what to say of Repayment. Didi Mamta is now forced to ask for three
years moratorium to pay the interest -
not the repayment.
Bogey of GDP: Governments mislead the common man by
relating the humongous loan burden on them by relating it to GDP.
GDP is the total market value of
all final goods and services produced in
a country in a given year, equal to total consumer, investment and government spending,
plus the value of exports, minus the
value of imports.
Obviously, GDP is much larger
than the Government Revenue. Hence the ratio of Sovereign debt to GDP appears
to be a smaller ratio. In fact, the ratio of Debt should be related to Gross
Revenue. It will then be 59.35%., in
other words more than half the money for expenditure comes from debt – every
year.
GDP is not the
amount that is available to the Government for meeting its loan liability or
any other expenditure. The money for payment of interest on debt and for
repayment will come from Revenue Receipts. The gross Revenue Receipt of the
country is estimated at Rs. 9.35 lacs comprising of Rs. 7.71 lacs as Tax
Revenue and Rs. 1.64 lacs as Non-tax Revenue (Non-tax Revenue is the income
from national Assets and Rights and the Real Income of the country). The
interest outgo on sovereign debt is estimated at Rs. 3.89 lacs for the FY
2012-13. that leaves a balance of only
Rs. 5.46 lacs for expenditure. The
Revenue and Plan Expenditure is planned at Rs. 14.90 lacs. Therefore, the
country will have to necessarily take further loan of Rs. 5.55 lac crores to
meet the gap between Income and Expenditure.
Thus we are now necessarily in deep Debt Trap.
The country will
never be able to come out of this vicious circle unless the Real income of the
country is increased. The need is to
bring the income from the Real assets of the country into exchequer and not
doling it out to big business for pittance.
The country will regain its lost status of ‘Golden Bird’ when our Rulers start bringing
into the exchequer fair value of National assets – doling it out to Big
Business for pittance has sunk the country into a ‘Debt Trap’.
At
the Center borrowed funds would accumulate to a level of over Rs. 48.15 lac
crores at the end of current FY 2012-13.
The interest outgo on this colossal amount would be Rs. 3.89 lac crores.
So I and you have to pay more taxes to fund this unnecessary cost. Apart from paying higher taxes we are
affected in more than one way –
a)
If the Government does not borrow such huge amount every year, then these funds
would be available to Industry and Trade to increase production and
business. Increased production and
business would bring more income to people reducing poverty level and
increasing their prosperity.
b)
With more funds available, Interest rates would fall. Interest is a significant cost factor for any
industry and business. Reduction in
interest would reduce cost, products would be available at lower price,
inflation would go down.
c)
Reduction in sovereign debt would give a boost to the credit rating of the
country. This will open up the gates for
more foreign funds at low rate of interest.
Therefore, for healthy growth of the economy
of the country and benefit of ‘aam aadmi’ it is e Debt.