India to Borrow and Spend More in 2010-2011

[RiazHaq]

Mr. Haq,

One more thing please look for India's sovereign ratings also which could give you some idea of the state of India's borrowing. Though ratings lag the reality it gives a fair bit of idea of the economy.

As far as greece or for that matter any other country under euro umbrella is concerned no country can print euro currency on their own. The money supply is totally controlled through brussels. Hence Greece can default on its euro borrowings. But that is not the case with India.

Also there are I think 15 countries with euro currency, right? Then how come each one has different rating?

Here is a pickle for you.....Greece, France, Germany, Portugal all use Euro. Are their soverign ratings (Moody's) same? If not then why?

The fact is that debt is sill debt, regardless of currency. Even though the US debt is denominated in its own currency, and it can print more to pay it off, there will still be severe consequences for the US economy if it chooses to take that path. That's why there is so much concern about rising national debt in US.

 

[keeninterest]

It is hilarious at times people feed on to carp being circulated this. From the FM’s speech:

112. The Gross Tax Receipts are estimated at Rs.7,46,651 crore. The Non Tax Revenue Receipts are estimated at Rs.1,48,118 crore. The net tax revenue to the Centre as well as the expenditure provisions in 2010-11 have been estimated with reference to the recommendations of the Thirteenth Finance Commission.

Now since the author of the article takes the defence budget as 32b usd for the proposed budgeted amount of Rs1,47,344crores, which means the exchange rate used to calculate the figure is Rs46.045 per usd, so for further calculations I will use the same exchange rate.

Gross Tax Receipts = Rs7,46,651crores = 162.15b usd
Non Tax Revenue Receipts = Rs1,48,118crores = 32.16b usd
Add to the above India intends to raise 40,000crores by way of divestment of stake in various PSUs/DPSUs, (mind you, India raised Rs25,000crores the present fiscal) so Rs40,000crores = 8.69b usd

The accumulated figure is =162.15+32.16+8.69= 203b usd

The total budgeted amount is:

113. The total expenditure proposed in the Budget Estimates for 2010-11 is Rs.11,08,749 crore, which is an increase of 8.6 per cent over the total expenditure in BE 2009-10. The Plan and Non Plan expenditures in BE 2010-11 are estimated at Rs.3,73,092 crore and Rs.7,35,657 crore, respectively.

Rs11,08,749 crores = 240.79b usd

The differential is certainly not 100b usd as is being propagated, but 240.79-203= 37.79b usd, which is what will be most likely the loaned amount, and one doubts even that will be the actual amount since some amount will remain unused, as keeps happening each fiscal.

Further India raises a lot of amount from the world bank which is based on grants, and credits with zero interest, and 0.75% financial charges, and half of the laons are routed through the International Bank for Reconstruction and Development (IBRD) way, where in there is no repayment for 15-20years with 3-5years grace time period and then the repayment gets started.

As for writing off the fiscal deficit in one go, India certainly does not intend to do that in one go, let us see how this will head this fiscal:

116. The fiscal deficit of 5.5 per cent of GDP in 2010-11 works out to Rs.3,81,408 crore. Taking into account the various other financing items for fiscal deficit, the actual net market borrowing of the Government in 2010-11 would be of the order of Rs.3,45,010 crore. There will be enough space to meet the credit needs of the private sector. The Government will plan the borrowing programme in consultation with the RBI.

Fiscal deficit = Rs 3,45,010 crores = 74.93b usd

The projected rate of fiscal deficit for next fiscal= 4.8% of gdp.
Economy is expected to be between 1.35-1.4b usd or Rs62,16,075-64,46,300 crores, so 4.8% accounts as = Rs 2,98,371-309403 crores = 64.79-67.2b usd.

 

[Hyde]

can anybody tell me what is the official debt of India?

and what is the inflation rate in India?

 

[keeninterest]

for the info ! Yes we are building roads at the rate of 20 Km per day and that is about 700 Km per year. We need money to finance them and debt is a good option. India in the recent past bought 300 tonnes of gold from IMF and do you know the converted value of that asset? Now the reason why getting debt is not a problem is because we have a reserve of over 250 billion $ in foreign exchange. We have also hedged our bets with a significant asset class such as gold. The market capitalisation of ONGC, BHEL, NTPC, SBI, NHPC, etc is mind boggling. And the majority share holder is GoI. Is that greater than the debt you are talking about?

You don't read replies to your post do you ? BTW, I did notice that you have till date not thanked a single post ! Is this an indicator?

The wealth owned by the GoI is close to 1 trillion $ in 2006 by considering its corporate assets (PSUs). India is yet to divest its PSUs and is planned for this financial year. Please refer to the market capitalisation of state banks and that will offset the debt that you have computed.

On comparison, each company listed on Karachi stock exchange can be bought out by one man in India and will still have half is assets left over. If you want to discuss India's debt then please do but don't make it sound as though we are living on our credit cards. In all honesty, we don't mind living on credit cards as long as we have enough assets to pay for it.

a correction there friend.

1 india plans to add 20kms of national highways starting june/july onwards.
2 we as of today add a daily of 150kms of state highway/ major district roads/ rural roads.
3 we are going to have a new aithority by for expressways, which will have its own daily targets.

the stats remain higher than :-

National Highways/Expressways 66,754
State Highways 1,28,000
Major district roads 4,70,000
Rural & other roads 26,50,000
Total (approx) 33,14,754

 

[Hyde]

a correction there friend.

1 india plans to add 20kms of national highways starting june/july onwards.
2 we as of today add a daily of 150kms of state highway/ major district roads/ rural roads.
3 we are going to have a new aithority by for expressways, which will have its own daily targets.

the stats remain higher than :-

National Highways/Expressways 66,754
State Highways 1,28,000
Major district roads 4,70,000
Rural & other roads 26,50,000
Total (approx) 33,14,754

i don't think 150KM is enough considering the Pakistan most part of Punjab has been constructed in last 10 years

My dad takes contracts from NHA so i am sure he would have constructed 15-25KM in past 2-3 years alone and then there are thousands of contractors in Pakistan (just giving a rough estimation)

 

[keeninterest]

i don't think 150KM is enough considering the Pakistan most part of Punjab has been constructed in last 10 years

My dad takes contracts from NHA so i am sure he would have constructed 15-25KM in past 2-3 years alone and then there are thousands of contractors in Pakistan (just giving a rough estimation)

congrats on your dad doing that much which is like 15-25kms in 2-3 years. if you missed out i said daily.

=150*365*3= 164,250kms

of course we had an idiot of a minister as road highway minister, and it has all changed for good now.

the revised targets for state highways/district roads/rural roads are over and above 200kms/day, in fact majority of the work being initiated under NREGA is buliding of such roads.

 

[NSG_BlackCats]

Riaz

Do you have a source for the exports figures. Asking because my understanding was that India's exports for 2009 are at approx 156 billion which puts it at about 12% of GDP (1.25 trillion)

Karan,
These are India’s exports and imports figures provided by RBI (Reserve Bank of India). So why rely on any other source? Our exports for 2006-07 were US $ 128 billion, for 2007-08 US $ 166 billion and for 2008-09 it was US $ 175 billion.

Source – Reserve Bank of India

Please do not bother about what a blogger is quoting and which source he is taking with a pinch of salt.

 

[Vasily Zaytsev]

Mr. Haq,

The fact that debt is debt does not mean that the same amount of debt carry the same default risk irrespective of country and currency.

agree or disagree?

You gave the example of greece in your post now you still haven't answered my question

if greece , france , portugal and germany all borrow the same amount in their local currency that is euro, is the dafault risk same for all four countries? if not why?

 

[Vasily Zaytsev]

mr. haq,

since you know a lot about Indian budget and the economics in general,

if a country borrows in its local currency and in foreign currency say dollar, do both borrowings have same default risk? if not then why?

if country A borrows 100 dollars and country B borrows 100 dollars, do they have same default risk? if no then why?

if country A borrows 100 dollars worth in its local currency and country B borrows 100 dollars worth in its local currency, do they have the same default risk? if no then why?

answer these then we will talk about your musings

 

[desiman]

The fact is that debt is sill debt, regardless of currency. Even though the US debt is denominated in its own currency, and it can print more to pay it off, there will still be severe consequences for the US economy if it chooses to take that path. That's why there is so much concern about rising national debt in US.

Where are you getting all this crap info from ? omg do you even know what economics is, seriously stop embarrassing yourself.

 

[Vasily Zaytsev]

desiman,

first let mr. haq answer my above questions then his embarrassment will become even more musingly enjoyable

 

[Atheist]

Haq is the laughing stock of every discussion - And yet he does cherry picking against India - I still dont get how the economics of a country work without borrowing money ( I mean debt) - Even the richest of the countries have a factor called as debt

 

[chinapakistan]

People say that Chinese like to hide stuff from world.Same does go with Indians.

Acorrding to idian media and indian PM's words, indian are not, really. If chinese have ten dollars, chinese possible say they have less than one dollar, but when indian have ten dollars, they will say they have millions. It can easily been seen from indian media or indian big mouth polician including indian PM.

 

[desiman]

desiman,

first let mr. haq answer my above questions then his embarrassment will become even more musingly enjoyable

lol nice one

 

[Vasily Zaytsev]

Well as far as this forum is concerned following points for the budget 2010-11 can be noted

exchange rate assumed 1 dollar= 46.10 Indian rupees

GDP (projected)= Rs. 6934700 crores = Us $ 1504 billion
(Source CSO Central Statistical Organization)

Fiscal Deficit = Rs 381408 Cr. = Us $ 82.73 billion = 5.5 % of GDP

Defence = Rs 147344 Cr = Us $ 31.96 billion = 2.125 % of GDP

Defence capex = Rs 60000 Cr = Us $ 13 billion

this year projected spending on defence purchases is Us $ 13 billion.

Not encouraging.