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By: Rohan Ranade
The “Debt Trap” Effect of
Governments Increasing
Borrowing Programs
Year After Year
• Bond yield is higher than economy
growth rate
• No country can live in Debt Trap
for long
• Loan taken to repay loan
• Most important macroeconomic
issue in India
• India's Debt-GDP ratio-67%(FY2013)
What is Debt Trap ?
Is India in Debt Trap?
India Debt Trend
• Developing Country
• Strategy to manage Resources
• Improve Relations with India
Reasons for giving Debts to India
• Corruption
• Political Instability
• Under Performing Government Departments
• Increase in Government Spending
• Exports Deficit
• Unplanned Use of the Money
Reason for taking Debt
• Internal Debt Trap
• External Debt Trap
• Direct Real Burden
• Decline in Expenditure to Public Welfare Programs
• Decline in the Value of Nation’s Currency
• Burden of Unproductive Foreign Debt
• Political Exploitation
Effects on the Economy
• Political Stability
• Accountability
• Economic Conditions
• Privatization
• Law and Order
Recommendation
– www.tradingeconomics.com/india/government-debt-to-gdp
– www.businesseconomics.in/?q=node/1627
– www.businessdictionary.com/definition/Debt-Trap.html
– www.economist.com/node/488864
References
Indian Economy
By K. R. Gupta, J. R. Gupta
The Indian Economy Since 1991:
Economic Reforms and
Performance
By B. A. Prakash
THANK YOU

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Debt trap

  • 1. By: Rohan Ranade The “Debt Trap” Effect of Governments Increasing Borrowing Programs Year After Year
  • 2. • Bond yield is higher than economy growth rate • No country can live in Debt Trap for long • Loan taken to repay loan • Most important macroeconomic issue in India • India's Debt-GDP ratio-67%(FY2013) What is Debt Trap ?
  • 3. Is India in Debt Trap?
  • 5. • Developing Country • Strategy to manage Resources • Improve Relations with India Reasons for giving Debts to India
  • 6. • Corruption • Political Instability • Under Performing Government Departments • Increase in Government Spending • Exports Deficit • Unplanned Use of the Money Reason for taking Debt
  • 7. • Internal Debt Trap • External Debt Trap • Direct Real Burden • Decline in Expenditure to Public Welfare Programs • Decline in the Value of Nation’s Currency • Burden of Unproductive Foreign Debt • Political Exploitation Effects on the Economy
  • 8. • Political Stability • Accountability • Economic Conditions • Privatization • Law and Order Recommendation
  • 9. – www.tradingeconomics.com/india/government-debt-to-gdp – www.businesseconomics.in/?q=node/1627 – www.businessdictionary.com/definition/Debt-Trap.html – www.economist.com/node/488864 References Indian Economy By K. R. Gupta, J. R. Gupta The Indian Economy Since 1991: Economic Reforms and Performance By B. A. Prakash