As per a report, Government of India, also known as Modi Sarkar, is going to borrow 6.55 Lakh Crores more to meet its budget requirements.
Modi Sarkar had a budget of 45 Lakh Crores for FY23-24. It has already borrowed 8.88 Lakh Crores till date. Now it is going to borrow an additional budgeted 6.55 Lakh Crores more to meet the budget deficit.
As a total (8.88+6.55) it works out to 15.43 Lakh Crores. This money is being borrowed by issuing Government Bonds at fixed rate of interest with a maturity date set for 40 Years! These bonds can be freely traded once issued.
Who buys these bonds?
Banks that have a mandatory requirement of maintaining reserves buy these bonds as and when they have to fulfill that requirement. So instead of holding cash, they hold these bonds after buying them either from RBI or from anyone who holds these bonds.
15.43 Lakh Crores is almost 35% of Modi Sarkar’s annual budget for FY23-24.
Modi Sarkar always tells us that everything is going great with the economy. It does not tell that it is in fact living in a debt trap.
A classic debt trap is when a person borrows money to repay old loans and interest on these loans. His debt keeps on increasing and one day comes when nobody is willing to give him any more money. Governments across the world are notorious for taking on such debt.
The ill effect of this borrowing is that central banks create money out of thin air and that lowers the purchasing power of money. If there is runaway inflation, it is because Governments are creating that inflation by eroding purchasing power of the money they issue.
How can you protect yourself from the ill effects of this borrowing?
There is hardly anything that you can do to protect yourself from the ill effects of reckless borrowing of the government. The borrowing will either be used to finance some projects or repay old loans. It will add to the money in the system. Over the last 8 years, since 2016, Modi Sarkar has increased the money supply from around 20,00,000 Crores to almost 60,00,000 Crores (Triple the level in 2016). This is having a devastating effect on purchasing power of money. There is race among the rich to triple their wealth just to stay at the same spot. You too will have to find methods of increasing your wealth.