Indian Rupee Falls to a Record Low Against the Dollar

[xyxmt]

20% for India, 79% for Pakistan.

https://data.worldbank.org/indicator/CM.MKT.LCAP.CD?locations=IN-PK

https://data.worldbank.org/indicator/DT.DOD.DECT.CD?locations=IN-PK&view=chart

So India has approx $500 billion debts and Pakistanis are takers loaner and beggers

 

[anant_s]

Also what the debt burden trend is important.

For example India as of March 2018 pays around 7.5% of receipts to debt servicing compared to 8.3% same month last year.

This is largely showing greater formalisation trend of Indian economy (increasing tax base).

@anant_s

Interest costs will come down based on returns made by government and also reduction in ledning cost after improvement of credit ratings.
I suppose what government must do now is to not indulge in populism for this is one area where money goes without serving any good economic reason. Control on its expenditure and ensuring projects get completed on time is vital not just for government but also for financial institutes and banks that lend money.

 

[Nilgiri]

So India has approx $500 billion debts and Pakistanis are takers loaner and beggers

Pakistan has 4 times the external debt rate when looking at the most relevant immediate Mx base (market cap)...given thats where the domestic bond market is connected to the most.

We will have to see how Pakistan deleverages here (either by growing its market cap much more or reducing its loan stockpile...or both).

 

[xyxmt]

Pakistan has 4 times the external debt rate when looking at the most relevant immediate Mx base (market cap)...given thats where the domestic bond market is connected to the most.

We will have to see how Pakistan deleverages here (either by growing its market cap much more or reducing its loan stockpile...or both).

Its proven that Pakistan is poor, broke and bhikari
I am talking about rich India

 

[Shamsher1990]

So India has approx $500 billion debts and Pakistanis are takers loaner and beggers

Its not just that. Its also the composition of the debt. Most of the Indian external debt is essentially corporate loans. Public debt is around 100-150 billion dollars IIRC. Meaning, if they fail to pay, those corporate will be declared bankrupt and their assets can be liquidated to pay the debt. There is a reason why Modi went to fixing bankruptcy law in India.

Pakistan on the other hand has most of the debt on the government. Meaning Government of Pakistan will have to increase taxes or sells public assets to pay back those debt.

I can provide source for both of the data if needed.

https://dea.gov.in/sites/default/files/QR published March 2018 PDF.pdf

 

[Nilgiri]

Its proven that Pakistan is poor, broke and bhikari
I am talking about rich India

India debt level is fine commensurate to its credit rating, market cap size, investment trends and tax collection trends.

 

[xyxmt]

Its not just that. Its also the composition of the debt. Most of the Indian external debt is essentially corporate loans. Public debt is around 100-150 billion dollars IIRC. Meaning, if they fail to pay, those corporate will be declared bankrupt and their assets can be liquidated to pay the debt. There is a reason why Modi went to fixing bankruptcy law in India.

Pakistan on the other hand has most of the debt on the government. Meaning Government of Pakistan will have to increase taxes or sells public assets to pay back those debt.

I can provide source for both of the data if needed.

Public debt for a country is the govt debt, you dont add xyz company's debt to public debt. just as you cant show you $100 towards forex

 

[Nilgiri]

Public debt for a country is the govt debt, you dont add xyz company's debt to public debt. just as you cant show you $100 towards forex

We are talking about external debt aren't we? External debt is debt owed to foreign sources, it has both public and private components.

 

[xyxmt]

India debt level is fine commensurate to its credit rating, market cap size, investment trends and tax collection trends.

Lets move to how this discussion started
"Pakistan is bhikary, loaner and beggar because it has $65 billion dollar debt
yet India is rich, powerful, super power because it has $500 billion debt"

math doesnt work here

no need for GDP, PPP, Per capita, human index, poverty reduction, large population, percent of population, large economy, Tata and vipro but what is in the quotes....otherwise I will bring in China into discussion

 

[Shamsher1990]

We are talking about external debt aren't we? External debt is debt owed to foreign sources, it has both public and private components.

True that. I think we need to clarify few things.

1. External debt : Debt to foreigners.
2. Soverign debt or Public debt : Debtor is government.
3. Commercial borrowing : Debtor is a corporate.

So you can have external debt which is taken by a commercial entity.

 

[xyxmt]

We are talking about external debt aren't we? External debt is debt owed to foreign sources, it has both public and private components.

you can keep twisting the words. I agree with you all, Pakistan is bhikari and India is rich because they have GDP, PPP, Percent of population and Forex

True that. I think we need to clarify few things.

1. External debt : Debt to foreigners.
2. Soverign debt or Public debt : Debtor is government.
3. Commercial borrowing : Debtor is a corporate.

So you can have external debt which is taken by a commercial entity.

you should also tell them that the repayment of those commercial debt lets say $2 billion repayment in 2019 for corporation xyz will come from the forex India holds with is approx 320 billion. those corporations dont shit dollars for repayments.

 

[Shamsher1990]

"Pakistan is bhikary, loaner and beggar because it has $65 billion dollar debt
yet India is rich, powerful, super power because it has $500 billion debt"

Okay, first I suggest that we do not use terms like 'bhiary' etc because they are demeaning and invoke heart more than head.

Next, here is a basic fact. Who is in trouble if they don't pay the debt? Those who took the debt or those who are guaranteeing it. Simple right? You don't have to worry just because your neighbour took a huge loan, so long you didn't guarenteed it.

Now if a company took debt from external party, what will happen if they don't pay. They will be forced to liquidate or sell their assets like land or machinery or stock to pay it.

Similar applies to the government. If they don't pay debt, they will :
1. Have to approach some entity like IMF or World Bank to help them servie their debt. Meaning more debt usually with conditions.
2. And/Or, they will have to impose taxes, much higher taxes.
3. And/Or, they will have to sell public properties, or lease them. Like Srilanka did to China.

Hence, public and private debt are basically different. Because the party taking debt is different. If TATA takes debt and they default, then they can be forced to sell their factories (to possibly Reliance ) to pay their debt. If Srilanka took debt from China and they cann't pay it, they have to work out a amicable deal with China to make concessions. Like they did by giving China 99 years of lease on a port.

you should also tell them that the repayment of those commercial debt lets say $2 billion repayment in 2019 for corporation xyz will come from the forex India holds with is approx 320 billion. those corporations dont shit dollars for repayments.

Actually they may 'shit dollars'. Likes of Tata have their part of assets and revenue in dollars.
And yes, if too much INR is converted to USD (say for repayment of debt in USD), then INR will go DOWN. It will be a currency crisis not a debt crisis. In such case government can sell part of its holding in forex to stabilize currency. Or if they choose to, let the currency slide and let the exports pick up the slack later on. Depending upon the situation.

 

[xyxmt]

Okay, first I suggest that we do not use terms like 'bhiary' etc because they are demeaning and invoke heart more than head.

Next, here is a basic fact. Who is in trouble if they don't pay the debt? Those who took the debt or those who are guaranteeing it. Simple right? You don't have to worry just because your neighbour took a huge loan, so long you didn't guarenteed it.

Now if a company took debt from external party, what will happen if they don't pay. They will be forced to liquidate or sell their assets like land or machinery or stock to pay it.

Similar applies to the government. If they don't pay debt, they will :
1. Have to approach some entity like IMF or World Bank to help them servie their debt. Meaning more debt usually with conditions.
2. And/Or, they will have to impose taxes, much higher taxes.
3. And/Or, they will have to sell public properties, or lease them. Like Srilanka did to China.

Hence, public and private debt are basically different. Because the party taking debt is different. If TATA takes debt and they default, then they can be forced to sell their factories (to possibly Reliance ) to pay their debt. If Srilanka took debt from China and they cann't pay it, they have to work out a amicable deal with China to make concessions. Like they did by giving China 99 years of lease on a port.

not talking about economics, one of your compatriot said in his post Pakistan is beggar and bhikary
I am showing you mirror who is bigger bhikari
1. the one who has $65 billion loans with 10 billion reserves = net worth -55 billion
2. or the one who has 520 billion loans and 320 billion in his pocket = net worth -200 billion

 

[Shamsher1990]

not talking about economics, one of your compatriot said in his post Pakistan is beggar and bhikary
I am showing you mirror who is bigger bhikari
1. the one who has $65 billion loans with 10 billion reserves = net worth -55 billion
2. or the one who has 520 billion loans and 320 billion in his pocket = net worth -200 billion

Well, indebtedness is not a very pleasant situation, that said when comparing you need to know few more things.

1. Who is holding the debt, what will happen if they don't pay back.
2. What is the respective incomes of those who hold debt.
3. What is the potential incomes of those who hold debt.
4. What are the assets of those who hold debt.
5. What kind of laws will operate to resolve debt default.

And this is where the situation is not favorable to Pakistan. That said, indebtedness and 'Bhikari' are two totally different words. One is a financial situation other is an abuse to insult a person. A person holding huge debt does not mean they should be insulted. There have been and had been countries who have gone in debt and come out of debt. One of my business partner used to say : More objectives and no adjectives.