Economics Gyaan

6.11.10

Debt. This four letter word is indeed sending shivers down the spine of economies across the world. And why wouldn't it? If used beyond reasonable proportions, debt has the capacity to seriously impair economic growth for years to come. And this is exactly what happened with most of the developed world. They took an overdose of it and are now suffering from its after effects. It seems India has also tried to take a lesson or two from this entire episode of excess leverage.

As per a leading daily, the Government is serious about a debt reduction strategy that would seek to improve upon the target already in place. If were to talk about numbers, then the Government is planning to lower the level of debt liabilities as a percentage of GDP to 43% by FY15. This is about 2% lower than the target already in place. If the target is indeed achieved, then it would ensure that interest rates stay lower, which in turn will boost both consumption as well as investment demand and ensure that economic growth comes in higher than normal. What more, this could also mean higher stock markets.

Courtesy: equitymaster.com