India to Borrow and Spend More in 2010-2011

[karan.1970]

We had B but Democracy came and .........

Bummer....

 

[RiazHaq]

Better than Pakistan's C+/B- .. Interesting that you left that out from the comparison

Also please check the forex reserve to External debt ratio of the Greece and Pakistan and compare it to India's and you will no why India will never default like the risk Greece is facing and Pakistan faced prior to the IMF bailout of 2009 Nov.

Remember, default is always towards external debt

Both nations are rated well below investment grade. The common term for bonds issued by them is "junk bonds", which carry much higher interest rates than the soft loans offered as "aid" by donor nations and IFIs.

 

[kumar_V1.0]

Both nations are rated well below investment grade. The common term for bonds issued by them is "junk bonds", which carry much higher interest rates than the soft loans offered as "aid" by donor nations and IFIs.

RATING CATEGORIES
Secure Range:
AAA Superior financial security. Highest safety.
AA Excellent financial security. Highly safe.
A Good financial security. More susceptible to economic change than highly rated companies.
BBB Adequate financial security. More vulnerable to economic changes than highly rated companies.India


Vulnerable Range:
BB Financial security may be adequate, but capacity to meet long-term policies is vulnerable.
B Vulnerable financial security. Pakistan
CCC Extremely vulnerable financial security. Questionable ability to meet obligations unless favorable conditions prevail
R Regulatory action. Placed under an order of rehabilitation and liquidation.

 

[karan.1970]

Both nations are rated well below investment grade. The common term for bonds issued by them is "junk bonds", which carry much higher interest rates than the soft loans offered as "aid" by donor nations and IFIs.

Not entirely true.. Indian rating is BBB- which is the lowest notch of Investment grade rating.. And is expected to be revised up in next few months..

Standard & Poor's - Wikipedia, the free encyclopedia

 

[kumar_V1.0]

Not entirely true.. Indian rating is BBB- which is the lowest notch of Investment grade rating.. And is expected to be revised up in next few months..

Standard & Poor's - Wikipedia, the free encyclopedia

This guy makes up all the numbers and hides facts to prove his point , In this thread his all points have been nullified but still he doesn't refrain from lying and distorting facts. Pathetic lair he is.

 

[RiazHaq]

Not entirely true.. Indian rating is BBB- which is the lowest notch of Investment grade rating.. And is expected to be revised up in next few months..

Standard & Poor's - Wikipedia, the free encyclopedia

You are right. S&P recently upped it to the lowest invest grade.
But Moody's, the other major agency, still rates Indian debt below investment grade.

 

[lhuang]

You are right. S&P recently upped it to the lowest invest grade.
But Moody's, the other major agency, still rates Indian debt below investment grade.

I suppose you're going to think up a conspiracy theory because S&P is led by an Indian.

^ Indian friend wanted me to write that.

 

[dvk1982]

Both nations are rated well below investment grade. The common term for bonds issued by them is "junk bonds", which carry much higher interest rates than the soft loans offered as "aid" by donor nations and IFIs.

dude if ur not sure plz dont say sth like u know it... Anything below BBB is called junk bond.... if Indias is in BBB- , its the lowest level in INVESTMENT GRADE not junk

 

[dvk1982]

You are right. S&P recently upped it to the lowest invest grade.
But Moody's, the other major agency, still rates Indian debt below investment grade.

u know what, even though Moodys is a major agency, when u take ratings from 2 agencies , they average it... and easiest way to compare is what is the going rate of average borrowing rates of India ? it is surely not in Junk category as of now.

 

[RiazHaq]

u know what, even though Moodys is a major agency, when u take ratings from 2 agencies , they average it... and easiest way to compare is what is the going rate of average borrowing rates of India ? it is surely not in Junk category as of now.

Even with its lowest investment grade (just a notch above junk), the interest rates India must pay on commercial loans would still be much higher than what it gets in soft loans. That's why India, like other developing nations, prefers soft loans (aka ODA or official development aid) from donor nations and world bank. That's the key point here.

 

[kumar_V1.0]

Even with its lowest investment grade (just a notch above junk), the interest rates India must pay on commercial loans would still be much higher than what it gets in soft loans. That's why India, like other developing nations, prefers soft loans (aka ODA or official development aid) from donor nations and world bank. That's the key point here.

And what percentage of India's borrowing is from abroad?

Mr Mukherjee has an opportunity to narrow the budget shortfall as accelerating economic growth boosts tax revenue and a stronger political mandate after last year’s elections paves the way to resume asset sales. Rating changes have less impact on India than other countries like Greece, which borrow more from abroad.
India’s foreign borrowings make up only about 4% of government debt compared with 83% for Greece, according to Citigroup.

 

[RiazHaq]

And what percentage of India's borrowing is from abroad?

Mr Mukherjee has an opportunity to narrow the budget shortfall as accelerating economic growth boosts tax revenue and a stronger political mandate after last year’s elections paves the way to resume asset sales. Rating changes have less impact on India than other countries like Greece, which borrow more from abroad.
India’s foreign borrowings make up only about 4% of government debt compared with 83% for Greece, according to Citigroup.

Here's the real picture of India's external debt as provided by Reserve Bank of India last year:

(i) India’s external debt, as at end-March 2009, was placed at US $ 229.9 billion (22.0 per cent of GDP) recording an increase of US $ 5.3 billion or 2.4 per cent over the level of the previous year mainly due to the increase in trade credits.

(ii) As per an international comparison of external debt of the twenty most indebted countries, India was the fifth most indebted country in 2007.

(iii) By way of composition of external debt, the share of commercial borrowings was the highest at 27.3 per cent as at end-March 2009 followed by short-term debt (21.5 per cent), NRI deposits (18.1 per cent) and multilateral debt (17.2 per cent).

http://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=20940

 

[karan.1970]

Here's the real picture of India's external debt as provided by Reserve Bank of India last year:

(i) India’s external debt, as at end-March 2009, was placed at US $ 229.9 billion (22.0 per cent of GDP) recording an increase of US $ 5.3 billion or 2.4 per cent over the level of the previous year mainly due to the increase in trade credits.

(ii) As per an international comparison of external debt of the twenty most indebted countries, India was the fifth most indebted country in 2007.

(iii) By way of composition of external debt, the share of commercial borrowings was the highest at 27.3 per cent as at end-March 2009 followed by short-term debt (21.5 per cent), NRI deposits (18.1 per cent) and multilateral debt (17.2 per cent).

Reserve Bank of India

Lower than the total Foreign reserves and gold and precisely why the risk of default is negligable to low.

Different story for Pakistan though

External debt: $ 55.6 billion
Forex reserves: $ 17 billion

 

[RiazHaq]

Lower than the total Foreign reserves and gold and precisely why the risk of default is negligable to low.

Different story for Pakistan though

External debt: $ 55.6 billion
Forex reserves: $ 17 billion

It's interesting to see you comparing to Pakistan in reserves while ignoring the widespread hunger, poverty, malnutrition and rampant open defecation that characterize "Shining India" today.

What good is you $250 billion in reserve when there is a food emergency in your country, and you are not spending it to save your starving children? I think it's shameful!

Haq's Musings: Malnutrition Challenge in India, Pakistan

 

[Trisonics]

It's interesting to see you comparing to Pakistan in reserves while ignoring the widespread hunger, poverty, malnutrition and rampant open defecation that characterize "Shining India" today.

What good is you $250 billion in reserve when there is a food emergency in your country, and you are not spending it to save your starving children? I think it's shameful!

Haq's Musings: Malnutrition Challenge in India, Pakistan

Stop bellowing like a broken record!!!
as always before you search, educate yourself!!!!

Forex management :

# support and maintain confidence in the policies for monetary and exchange rate management including the capacity to intervene in support of the national or union currency;

# limit external vulnerability by maintaining foreign currency liquidity to absorb shocks during times of crisis or when access to borrowing is curtailed and in doing so;

# provide a level of confidence to markets that a country can meet its external obligations;

# demonstrate the backing of domestic currency by external assets;

# assist the government in meeting its foreign exchange needs and external debt obligations; and

# maintain a reserve for national disasters or emergencies.

source: International monetary funds!!!

India is not foolish like you suggest and neither it is shameful because

UN says 227m people escaped slums in past decade
he improvement was thanks largely to housing efforts in China and India, which made "giant strides", according to a report by the UN Habitat agency.

BBC News - UN says 227m people escaped slums in past decade

Now what is Pakistan's story?