National debt : Pakistan vs India

[Spectre]

Raghuram Rajan is a Smart guy, he knows how to handle deflect and has saved Rs in his tenure. The line which I Bolded, is right on point by you.

I have tremendous respect for all RBI Governors from Bimal Jalan to Raghuram Rajan. They have done a splendid job of course correction. Otherwise disastrous fiscal policies of UPA would have bankrupted India if RBI had not controlled the Monetary Policy.

Its sad that Govt is taking power away from RBI for monetary policy citing conflict of interest and proposing a joint structure.

 

[Georgeclark]

Forex is simply foreign exchange chiefly USD, EURO and YEN and now RENMINBI too.

In a typical case lets say GOI needs to pay 1 Billion USD on 1st of July to Japan for debt servicing and lets say some company like Bank of America or British Petroleum need to pay Infosys and TCS I Billion USD.

Now TCS and Infosys have no use for USD as all there expenses are in rupees and Japan has no use for rupees so based on supply and demand they will exchange rupees for dollars at set market price. Rupees goes to TCS and Infosys and Dollar goes to Japan.

Reserves don't come in picture



I have tremendous respect for all RBI Governors from Bimal Jalan to Raghuram Rajan. They have done a splendid job of course correction. Otherwise disastrous fiscal policies of UPA would have bankrupted India if RBI had not controlled the Monetary Policy.

Its sad that Govt is taking power away from RBI for monetary policy citing conflict of interest and proposing a joint structure.

Join Structure would ensure working policy to be in governments hands too. Who knows tomorrow RBI Chief is not a remarkable one.

 

[Spectre]

So? How did RBI not 'service external debt through forex'?

Forex is simply foreign exchange chiefly USD, EURO and YEN and now RENMINBI too.

In a typical case lets say GOI needs to pay 1 Billion USD on 1st of July to Japan for debt servicing and lets say some company like Bank of America or British Petroleum need to pay Infosys and TCS I Billion USD.

Now TCS and Infosys have no use for USD as all there expenses are in rupees and Japan has no use for rupees so based on supply and demand they will exchange rupees for dollars at set market price. Rupees goes to TCS and Infosys and Dollar goes to Japan.

Reserves don't come in picture

Join Structure would ensure working policy to be in governments hands too. Who knows tomorrow RBI Chief is not a remarkable one.

There are two lobbies in RBI, I am dreading that the next RBI chief will be nominated by the Bengali Lobby who have some disastrous policies in mind. As of now Raghuram Rajan has kept them pacified by making minuscule rate cuts which don't do overt harm but who knows what will happen in future.

As long as fiscal policy pursued by GOI is populist in nature, Its imperative that RBI keeps rates under control

 

[ravindra1455]

Ok guys I just came across some facts about national debts of Pakistan and India.
Frankly I have no idea what these figures mean for the economic future of both countries.
How will Pakistan and Ind ever get rid of so much debt ??

i am some time surprice that a country like U.S is also under debt.
then who is giving debt

 

[Spectre]

i am some time surprice that a country like U.S is also under debt.
then who is giving debt

Mainly China, Japan and Arabs

 

[Rajaraja Chola]

Indian Exports are at $550 Billion + as of now (Consider it 600) and Foreign reserves are swelling, $650 Billion worth of retail market, you can expect a good time ahead.

Its not. Exports are about 340$B

 

[I S I]

Lol Supaa pawwa in debt into depth.

 

[Georgeclark]

Its not. Exports are about 340$B

Service + Merchandise

 

[21 Dec 2012]

In a typical case lets say GOI needs to pay 1 Billion USD on 1st of July to Japan for debt servicing and lets say some company like Bank of America or British Petroleum need to pay Infosys and TCS I Billion USD.

Now TCS and Infosys have no use for USD as all there expenses are in rupees and Japan has no use for rupees so based on supply and demand they will exchange rupees for dollars at set market price. Rupees goes to TCS and Infosys and Dollar goes to Japan.

This is a very poor and crude example. Infosys and TCS will exchange dollars at their local EXIM Bank or one providing such services. THEY (banks) will trade dollars at Spot or Futures market. As far as the debt goes, RBI doesn't rush to the market every time a payment has to be made. It has a ready stockpile of reserves, the dates are already known and whence they arrive, payment is processed.

 

[surya kiran]

Join Structure would ensure working policy to be in governments hands too. Who knows tomorrow RBI Chief is not a remarkable one.

Monetary and fiscal policy are two different things. Using monetary policy instruments to promote populist expenditures will have disastrous consequences. Best to keep the 2 institutes different.

 

[Georgeclark]

Monetary and fiscal policy are two different things. Using monetary policy instruments to promote populist expenditures will have disastrous consequences. Best to keep the 2 institutes different.

As Spectre Said :

There are two lobbies in RBI, I am dreading that the next RBI chief will be nominated by the Bengali Lobby who have some disastrous policies in mind. As of now Raghuram Rajan has kept them pacified by making minuscule rate cuts which don't do overt harm but who knows what will happen in future.

As long as fiscal policy pursued by GOI is populist in nature, Its imperative that RBI keeps rates under control

 

[Spectre]

This is a very poor and crude example. Infosys and TCS will exchange dollars at their local EXIM Bank or one providing such services. THEY (banks) will trade dollars at Spot or Futures market. As far as the debt goes, RBI doesn't rush to the market every time a payment has to be made. It has a ready stockpile of reserves, the dates are already known and whence they arrive, payment is processed.

I agree it is a crude example but what's your point? I have said that RBI uses Forex reserves to stabilize currency fluctuation, and reserves should not be used to fund spending. Do you dispute these points?

I have never said RBI rushes everytime to make payments, can you show me the relevant quote where I have mentioned its the duty of RBI to to rush to market to make payments?

What i did say by means of the example is Rupee is a liquid currency hence there is always demand and supply for it. Merchant bankers match the demand and supply and arrive at the price at which buy/sell txn takes place.

Forex again is simply foreign exchange, When i talk of reserves i mean forex reserves which RBI does not use to service debt. Ca Va?

I would appreciate if you don't misquote me.

Thanks

 

[Echo_419]

Ok guys I just came across some facts about national debts of Pakistan and India.
Frankly I have no idea what these figures mean for the economic future of both countries.
How will Pakistan and Ind ever get rid of so much debt ??

A small percentage of our economy