THE ROOT CAUSE OF FAILURE OF INDIA INTERNATIONALLY ON ECONOMICAL PLATFORM

GOVT. DEBT IN INDIA Features 1) Continuously increased since 1951. 2) Govt. debt is 65% of GNP. 3) In developing countries we stand 2nd for carrying such debt. 4) Total GNP is Rs 92 lakh core out of that govt. debt is Rs 60 lakh crore. 5) As per the budget of 2011-12 it was decided to take debt of Rs 4,17,128 Crore ,but because of financial problem the debt has been increased by Rs 92,872 crore. The total debt up to November 2011 is Rs 5,10,000 Crore it will go on increasing till march 2012. 6) The ratio of govt. debt to the countries GNP is increased to 5.5% from 4.5%. 7) Out of total receipt of the govt. (approx 8,50,000 Crore), the share of debt (5,10,000 Crore) is highest. 8) In the fiscal year 2011-12 up till November 2011 (8months period) out of expected receipt of Rs 8,45,000 Crore only Rs 4,07,325 Crore only been recovered. This is only a 48% recovery out of total expected receipt. 9) The recovery of remaining R. 4,37,675 Crore within next 4 months is highly impossible. WHY THIS POSITION

1) Out of total expenditure if the expenditure is of the capital nature then it is considered as healthy investment for the nations survival. In India out of total govt. expenditure only 12% is of the nature of capital expenditure reaming all the expenditure is on unproductive things.

2) In the era of privatization the importance of Govt. interference is not reduced 3) Because continuous devaluation of rupee the prices of importing crude oil has increased , resulted increase deficit in balance of payment by 3%. 4) Reason for failure in collection of expected receipt : since 2007 country has to face economic recession twice; A) 2008-09 it was American debt crisis. B) From 2010-till date euro crisis. At the time of both the crisis the investment in the country reduces as a result there is slow churn in the Industrial area, which affect the govt. to cover overall expected receipt. 5) Govt. not only failed in recovering expected receipt & but also in debt recovery. 6) Because of many reasons which is been escalated in the court of law, there is big amt of tax recovery pending. Govt. still waiting for the result to come & then after the recovery, 7) Because of n number of reason (especially political) Govt. debt reached beyond limit. CONSEQUENCE: 1) No Infrastructure Development: with the high fiscal deficit especially because of increased share of revenue expenditure there is no money left with the govt. to spend on capital expenditure. It is expected that the govt. spend its expenditure on basic infrastructure facilities (electricity, roads, railways, airport, research, education, etc) but because of increasing fiscal deficit there is limitation on the govt. as a result the rate of growth reduces. 3) Failure of Monetary Policy: Because of high govt. debt money churns openly in the market, which invites inflation by default, and RBI also fails to control the inflation with the change in monetary policy by 13 times or 15 times. 4) Negative development of Private sector: as the maximum amount of fiscal budget pulled by govt. there is no money left for the private sector to pull, and if this will be continued the private sector would be thrown out with the less scope for investment & development.

5) Underdeveloped country: with increasing govt. debt there will be inflated interest rates, beyond that if investment & development will be trapped then how poverty will be reduced? how employment will be generated. 6) Begging to IMF like year 1991: If this position is continued sooner we require to beg to IMF (International Monetary Fund), it will invite the repetition of the position of the year 1991. Thus, Increasing govt. debt is the only reason for the failure of india, internationally on economical grounds. Hope in the upcoming budget there will be the provision for the same & finance ministry will be able to take India out of this.