Recently, our Finance Minister, Nirmala Sitharaman, has said that India is trying to cut its debt that has reached 82% of our GDP.
In a recent interview, she spoke about how Modi Sarkar is concerned about the country’s growing debt and how it plans to cut the debt.
When Modi Sarkar took over in 2014, our total debt stood at 55,00,000 Crores (Fifty Five Lakh Crores). This was the total debt accumulated by all previous governments since 1950.
Then we went on a borrowing spree and in 2023 our total debt now stands at 156,00,000 Crores (One Hundred and Fifty Six Lakh Crores), an increase of just 101 Lakh Crores!
According to Moody’s rating, a debt of around 56% of GDP gets a Baa rating.
Any fall in rating increases the cost of borrowing for the whole country.
Pakistan’s Credit rating is B3 with negative outlook. When Sri Lanka went bust it had a debt to GDP of 101%.
Unfortunately, even though the FM talked about how Modi Sarkar does not want to burden the future citizens of debt burden, she was not very specific about the actions that the government is taking to reduce the debt.
Our exports are falling, our rupee is losing value and while our imports are falling too, it has got more to do with fall in import of crude, gold and diamond that we process and send abroad.
The result is that our trade deficit is growing with each passing month. We now have a 100 Billion USD trade deficit with China itself.
Barring a miracle, one really can’t fathom how the FM and Modi Sarkar are going to reduce our debt.
Fall in value of rupee is also making dollar inflow slower as senders wait for a better value for their dollar.
With a world wide recession in play, new Foreign Direct Investments are also drying up.
All in all, tough time for Modi Sarkar and for all of us.