03-05-2010, 04:11 PM
[quote name='manish' date='05 March 2010 - 05:53 AM' timestamp='1267748113' post='104842']
[quote name='ankit-s' date='03 March 2010 - 04:00 AM' timestamp='1267568531' post='104733']
You are once again banking on future of India and its future progress - look at PRESENT and try to compare apples to apples, and in the same vein, India has the lowest TAX GDP ratio collection. I have White House to sell too in Washington DC you wanna buy!
[/quot]
[url="http://Could PRC's true fiscal deficit be 15% of GDP??"]Could PRC's true fiscal deficit be 15% of GDP??[/url]
Manishji external debt is something else, that must be paid back in the same hard currency as USD-EURO as borrowed, cause similar things happen in India too whenever there is interbank borrowing, and local bodies borrowing in Rupees, so do our states n union territories who borrow locally. This does not effect a sovereign debt crisis so dont confuse it with local borrowings in Yaun or as in Rupees in India.
To give you an example:
Lets say a state like Kerala-Kashmir does not pay back and (which they havnt) and they have defaulted, but what happens? The central government keeps on helping them (Aid/Grant) because its a part of their own country.
However, Internationally, if a country like Pakistan or Sudan defaults on IMF or WB loans, they are not entitled to borrow further, because their rating has been downgraded.
So in the same vein, if the Indian state/union territory defaults, it gets away, but such is not the case internationally where you are bound by your signature on the dotted line and your ability to borrow further is restricted. Failed state it becomes!
Sovereign debt differs big time than a local debt within oneôs own country!
Even your article says in the followings:
Same thing happened to Iceland, its 3 biggest banks defaulted, their combined debt exceeded approximately six times the nation's gross domestic product of 19 billion USD. Iceland stated that the state did not intend to take over any of the banks' foreign debts or assets. Instead, new banks were established around the domestic operations of the banks, and the old banks ran into bankruptcy. Iceland was not involved in a sovereign debt fiasco.
BTW China is a cash cow sitting on 2.3 trillion FOREX which makes it roughly 230 billions annually as Interest and other income earned from such smart investment by Chinese, while China has just 360 billions n external debt versus Indiaôs 240 billions.
As of Kerala, V S Achuthanandan wants to borrow n borrow as if there is no tomorrow: The restrictions on borrowing from within the country must be removed - says he. www.keralacm.gov.in/
[quote name='ankit-s' date='03 March 2010 - 04:00 AM' timestamp='1267568531' post='104733']
You are once again banking on future of India and its future progress - look at PRESENT and try to compare apples to apples, and in the same vein, India has the lowest TAX GDP ratio collection. I have White House to sell too in Washington DC you wanna buy!
[/quot]
[url="http://Could PRC's true fiscal deficit be 15% of GDP??"]Could PRC's true fiscal deficit be 15% of GDP??[/url]
Quote:State media reported that Chinaââ¬â¢s local governments borrowed 3.8 trillion yuan ($556 billion) from banks last year, to keep the economy humming. They also raised 450 billion yuan ($65.9 billion) indirectly via the bond market. Add those debts to Beijing's own, and the real 2009 fiscal deficit could be 15 per cent of 2009's GDP.
Manishji external debt is something else, that must be paid back in the same hard currency as USD-EURO as borrowed, cause similar things happen in India too whenever there is interbank borrowing, and local bodies borrowing in Rupees, so do our states n union territories who borrow locally. This does not effect a sovereign debt crisis so dont confuse it with local borrowings in Yaun or as in Rupees in India.
To give you an example:
Lets say a state like Kerala-Kashmir does not pay back and (which they havnt) and they have defaulted, but what happens? The central government keeps on helping them (Aid/Grant) because its a part of their own country.
However, Internationally, if a country like Pakistan or Sudan defaults on IMF or WB loans, they are not entitled to borrow further, because their rating has been downgraded.
So in the same vein, if the Indian state/union territory defaults, it gets away, but such is not the case internationally where you are bound by your signature on the dotted line and your ability to borrow further is restricted. Failed state it becomes!
Sovereign debt differs big time than a local debt within oneôs own country!
Even your article says in the followings:
Quote:That sounds scary, especially as local governments may not have spent their borrowed funds wisely. But a sovereign debt crisis is unlikely. Even if Beijing absorbed all the local debts, total public borrowing would remain safely below 60 per cent of GDP. Beijing is unlikely to acknowledge the debts as its own. That means future defaults could be left for banks to mop up. That 3 trillion yuan is equal to 10 times the 2008 earnings of the three largest listed banks and would be enough to bring the non-performing loan ratio in the banking system up from less than 2 percent to 9 percent, based on current asset levels.
Same thing happened to Iceland, its 3 biggest banks defaulted, their combined debt exceeded approximately six times the nation's gross domestic product of 19 billion USD. Iceland stated that the state did not intend to take over any of the banks' foreign debts or assets. Instead, new banks were established around the domestic operations of the banks, and the old banks ran into bankruptcy. Iceland was not involved in a sovereign debt fiasco.
BTW China is a cash cow sitting on 2.3 trillion FOREX which makes it roughly 230 billions annually as Interest and other income earned from such smart investment by Chinese, while China has just 360 billions n external debt versus Indiaôs 240 billions.
As of Kerala, V S Achuthanandan wants to borrow n borrow as if there is no tomorrow: The restrictions on borrowing from within the country must be removed - says he. www.keralacm.gov.in/