‘you can spend only – that much of what is contained inside’ - is a famous catchline in Tamil. Howsoever generous hearted one may be, one cannot be offering help to everybody all the time.
It is a paradigm that in a country where ‘gambling is considered a sin’ there are always many forms of gambling and crores are thrown in. The common middle class somehow ends up loser in every possible way – some thought of, some created and some made up somewhere else. Petrol prices continue to go up, and resultantly cost of essentials also go up. Then there is inflation, food inflation and more – spiralling prices and common left with no option resorts to “borrowing”
As I read elsewhere – inflation also causes increase in interest rates which again affects the common man. There was a thought-provoking article in Indian Express titled ‘: Is you child going to inherit your home loan?’ - With banks and finance companies raising home loan rates by about 250-300 basis points in the last year-and-a-half, the risk of passing on the loan repayment to the next generation has become a distinct possibility. The person would have availed the loan at the age of 40 on a 20 year term, hoping to finish repayment by the time he retires from service – but when interest rates go up, and the EMI remains constant, the duration cannot but get extended, perhaps making the heir to assume the loan than inherit any property. By that time, the house would have become old and may or may not have appreciated in a big way – but the debt trap would remain….
In some ways the problem is not of high interest and resultant EMIs alone – but is more of buying a property at a wrong time – at inflated prices ! can there be a hedge against this risk ?? – sometimes you find that you buy a property at certain rate and after a couple of years instead of the appreciation that you dream of, the value or the rate would actually have gone down – either to the availability of more at the same place or some indescribable reason… prices of construction material and everything else goes up but not the price of your flat or house !! - that is the fate of an individual
At a National scenario, Balance of Payments is an accounting record of all monetary transaction of a Country with the rest of the World. This somewhat a Balance sheet of a country and would include payments for the country’s exports and imports, goods, services, financial transfers and more. India like many other countries suffers from BOP deficit inherited from its Independence India
To put is mildly, India does not enough for itself………… but going by news reports India Germany and France have proposed a $1.2-trillion plan to pull out countries like Greece , Italy and Spain
Probably, Greece is drawn neck deep in its debts and some Nations are out to bail them out……… but is India Greece (from which most Nations including India
That Debt trap was brought about by Nation’s borrowing and spending. The country went on a spending spree – wild spending on everything including building expensive sports facilities (remember 2004 Athens Olympics celebrated in a big way) When you spend everything as if today is the last day of the Universe – there cannot be a bright opening. There have to be reliable ways of augmenting revenue but in Nations dotted with widespread tax evasion and spending beyond means, the credibility of economic status can only fall. In late 2008, the financial crisis erupted exposing the economy’s flaws. It is stated that for a country of 11 M population, the debt is 340 billion Euros (about 31000 euros per person)
As the Govt tried to cut spending and introduce austerity measures aimed at reducing the fiscal debts, there is not much cooperation as that would involve PSU pay and pension cuts, and increased taxes.
There are fears that there are many Countries in a similar scenario and one can reproduce the same story replacing Greece with another Country’s name………. that is alarming indeed… !!!
With regards – S. Sampathkumar
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