Salient Features of Indian Economy

• The German government made on payment of reparations to France, but the following year it announced it could not make any more payments due to financial crisis.

In the long term the increase of foreign debt can lead to a debt sustainability problem, if Australia becomes overwhelmed with debt the economy will find it hard to service current debts. If the size of the debt is rising faster then the increase of GDP the interest payments on the debt will progressively

We are in debt because of the war for our freedom against the British. Now we are considering about paying 15 million for land we have never seen. This money will go to the French so they can go to war with the British that might involve us. It will take some time to pay it off. We don't have the money.

2. The government asks for loans from international banks on credit of the U.S. and the debt must be paid

The remainder of the Federal debt is owed to state and local governments and the United States Federal Reserve Bank. These groups only hold 10 percent or less of the debt. (The government and the Federal Reserve are independent of each other, which are why the Federal Reserve has their own debt to the Federal debt. In the economy of the United States the Federal Reserve buys and sells the

The United States is one of the industrialized countries that offer a small amount of aid. ( Fact Based)

The debt in the United States has been growing for decades and has accumulated all the way up to 19.9 trillion dollars. This amounts to 61,036 for each person living in the U.S, 157,735 for each household, 104 % of the U.S gross domestic product, and 546% of annual federal revenues. Tackling debt and deficits is a national security issue that affects our ability to compete in the international system. The proportion of U.S. government debt held by foreign entities has significantly increased.

Riddell, Roger C. 2007. Does Foreign Aid Really Work? 1st ed. OXFORD: Oxford University Press, USA.

Deliberate barbaric British policies made the natives consume their costly goods whilst implying hefty tax and left millions of Indians unemployed due to economic exploitation and destruction of major companies. With limited ways to make money and a heavy tax on unwanted food and resources, famine became a rising issue. Consequently, the great country of abundant resources and wealth had become the exact opposite as extreme poverty, hunger and disease painfully took over the country. In Fact, poverty and starvation seized 30 million native lives. Unfortunately, 270 millions of Indians continue to experience poverty to this

Throughout 1994, Mexico lost significant amounts of reserves trying to stabilise the exchange rate. In 1989 the current account deficit was US$6 billion; by 1991 it had grown to US$15billion, before swelling to approximately US$20billion 1992 and 1993. However, after losing US$1.5billion in reserves over three days in early December 1994, the Government decided to depreciate the Peso by approximately 15%. Within days the Peso plummeted in value as the Government abandoned its new peg, sending the country into the 1994 Mexico financial crisis (Joseph & Whitt 1996).

A nation can finance its own deficit by selling a variety of financial assets to foreign nations. The US has been selling private equity, private debt and government debt. It is amazing that the US is now an importer of private equity securities. It is more striking that the current account deficit is the US is being financed by Central Banks of Asian countries. Economists say that the Asian Central Banks have paid over 80% of the current account deficit in 2003. In many nations dollars reserve have increased dramatically by 2004: “Dollar reserves increased by 150 billion in China and Japan each, and by 200 billion in the rest of the world” (Stuchtey 5).

Eventually the debt has to be paid back, and when it does Australians income is diverted from consumption to servicing the debt. This means that luxuries that are classified as the basic standard of living for everyday Australian’s have to be foregone to be able pay taxes and the increased prices in everyday prices. In paying off debt the government has to raise revenue to service their public debt, this is usually done in increasing taxes which is why so many governments are hesitant to peruse this difficult issue. Or provided the return is high enough the profits from the investment should be enough to deliver to the shareholders. (Adkins, 2015) On the other hand the private sector must also repay investors or loans through maximising profits to service their liabilities, this is sometimes done by pushing the burden onto the customer or by cutting costs (job cuts). If that is not possible businesses or individuals go bankrupt are forced into liquidation. It is much more difficult for the government or entire country to go bankrupt, as government could just sell more bonds or their citizens would

Although government loans are for the most part not secured by physical assets, they are regarded in law as contracts carrying an obligation on the part of the debtor to repay. Nevertheless, governments, when hard-pressed during economic crises or as a result of political upheavals, have sometimes repudiated their public debts in whole or in part. In many cases, also, a government to whom another is in debt may agree to forgive the debt or reschedule its payment over a longer period.

During the 1980s, the Baker and Brady Plans were initiated to alleviate developing countries debts. The former plan called upon financial institutions to increase lending to developing countries by up to 50% and the latter plan sought to annul debt through collaboration with private-sector lenders. Developing countries’ debt problems became known as debt overhang whereby the “presence of existing ‘inherited’ debt” exacerbated the debtor countries’ economic hardships. While the Baker Plan was largely ineffective, the Brady Plan helped revive the Third World debt market and the composition of capital flows in the Brady countries shifted away from the public sector to the private sector in the form of foreign direct investment (FDI) and equity.

Increase in fiscal Incentives[Fiscal incentives are no taxes given to new companies for the first 5 years]