Saturday, September 26, 2015
.Govts understandably may not be able to follow the dictum of meeting salary & pension outlay from income ,as they have to cater to social equity and seek funds for long term growth. This must come from borrowings.But the fig in the said study of Net Present Value of future pension payments being laid out at 2/3 of the GDP ( (2004), is stunning .The inexorable burden of Pay Commissions hastens a Grecian tragedy .Another study says that OROP implications would push up outgo many fold ! All this portends heavy debt.
Our total debt to GDP is at 66%, on date.Big ticket plans to pursue growth would boost the debt further.The enormous delays in getting projects running ,make for greater debt.Without serious application of mind now ,the burden is bound to spiral. National debt of Japan is at 230% of GDP and it has been battling stagflation for two decades now.Greece at 350% ,went bankrupt.The US at 103 % is not bothered as it prints dollars ,that unlike soveriegn bonds of other stressed nations whose coupon rates shoot up, actually gains value ! . We may be happy to limit a transient fiscal deficit today,but the silent burden of debt we would be building up by way of extravagant pensions for the privileged , not capping the number of govt jobs, leaking welfare schemes ,all seeding inflation,could well render us incapable of servicing our debts .The NDA may gain in politics today ,but should it retain power ,its next avatar may have to succumb to economics.
llll. R.Narayanan ,Ghaziabad . llllll
Subscribe to:
Posts (Atom)