Gold Chain

ORIGIN OF EXTERNAL DEBT CRISIS  External debt refers to that portion of the country's debt which  borrowed from abroad comprising of foreign exchange from lenders including commercial banks, governments or global financial institutions and multilateral agencies. Foreign debt can be borrowed from government, corportions or global financial institutions. The magnitude of external debt and debt servicing requirements pose a serious matter of concern particularly to less developed countries. This was more alarming when in  the aftermath of first oil price hike of 1973 caused large accumulated import bill for non oil developing countries and the beneficiaries from rapid inflows of petro dollars which surged their earnings in commercial banks and other financial institutions.Flush with foreign currency they started to lend  the money for the development of much needed  less developed countries.After 1979 they found that the huge accumulated external debt became a real...

 INEQUALITY India has already been ranked as the 5th largest economy in the world GDP  and poised to reach $ 7.3 billion by 2030 and$10 trillion mark 2035,  set to become 3rd largest economy and eventually a developed economy by 2047.However since liberalisation, privatisation and globalisation of Indian economy our GDP growth expanded breaking  "Hindu Growth " barrier and entered into a new growth trajectory, This new growth trajectory was buttresed by robust domestic demand, increased investment in infrastructure by the Government and strong private consumption particularly among high income groups. The objective is to become a developed economy by 2047.Despite stellar growth performance in recent years India remains one of the most unequal country of the world with top 10% of population holding 77% of the total national wealth. The richest 1% of the Indian population owns 53% of the country's wealth as against the share of the bottom half has shrunk to mere  ...

RUPEE DEPRECIATION  Generally foreign exchange rates are determined by the forces of demand and supply of currencies available  in the global or foreign exchange market. The exchange rate refers to the rate at which domestic currency (eg.Indian Rupee) is exchanged for foreign currency (eg US dollar)..In other words exchange rate is the external purchasing power of domestic currency. It is  to be noted here that in India foreign exchange with its limited availability was treated like a controlled precious commodity. Foreign exchange control was administered in the country under  different rules and regulations like Defence of India Rules  September 3,1939,Foreign Exchange Regulation Act 1947which was replaced by Foreign Exchange Regulation Act 1973.Further Foreign exchange Regulation Act FERA was replaced byFEMA or Foreign Exchange Management Act in 1999 witth a view to liberalise Indian economy and promote foreign investment,which came into force from June 1st...

Generally economic policy objectives are attaining higher levels of income output and employment and maintaining stability in the price level and balance of Payments Following the second Quarter of 2024-25  drastic slippage of GDP growth to 5.4  percent occured in July-September (Q2) FY 25 .Consequentlly growth projections have been down graded by different agencies as follows-Bank of Baroda from 7.3-7.4 to 6.6-6.8,ICRA 7 to 6.5-6.7,HDFC Bank from  6.8 to 6.5,IDFC First Bank from 6.6 to 6.3,Kotak Mahindra Bank from 6.7 to 6.1 Goldman Sachs from 6.5 to 6 etc.  Many experts including PronabSen believe that as per the prevailing conditions on a stable basis maximum India can grow during the financial year 2024-25 is  only 6.5%.,Various explanations were given for the decline in Q2 growth.Accorrdingly RBI lowered  its annual growth forecast for Fy 2025 to 6.6% in the current monetaryvpolicy statement. Performance of Q2 growth last year 2023-24 were exceptionall...