In the current region of the political party, the debt of India seems to be very high along with the high interest rate. The opposition parties and other financial experts are raising the issue of debt very frequently in the public domain. When the debt on the government increases to a very great extent it has substantial effects on the economy also. The growth strategy needs to be implemented by the government to cover the debt as soon as possible along with the interest amount accumulated. It's also necessary to balance the economic conditions because of the increasing debts.The Forex foreign money exchange rate in India also has a diverse effect because of the increasing debts.The external debts have increased by almost 174% and the internal ones by 100%. Let us first understand the effects of India's Loan of Rs 169, 46, 666.85 crore over the Economic landscape. They are as follows-
1) Interest rates-
While India's debt is increasing at great levels there is a direct effect on the interest rates. The interest rates also increase on the substantial public loans and investments to make sure the demand is been met. The government tries to balance the debt by increasing the interest rates to gather the loan amount from the general public in the form of the interest rates on the loans taken by them. When the rate of interest at the banks increases the common public tries to curb their financial planning related to the taking of loans from institutions. However, the numbers do not indicate any slowing as the loan amount keeps rising along with the interest rate. However, investment in foreign exchange can be relatively better, also as explained by the Top Foreign exchange agents in Delhi NCR.
2) Lesser consumption-
Online Forex exchange service supplier in Delhi NCR clearly states the direct effect public debt has on the Indian economy is reduction in the consumption The pressure of contributing to the public debts increases on the people by way of inflation as everything becomes very expensive. Due to the increased rates and taxes also, people will start buying the goods in less quantity than they were buying before. When the people consume less the balance cannot be achieved by paying out the loans taken by our government. As per Economics Times1, the FMCG companies are looking on enviously, unable to sell as much of biscuits, soaps, shampoos and perfumes as they would like. Economists trace the dichotomy to the pandemic, exacerbated by the subsequent developments that sharpened the contrast.
3) Distribution-
The Increased Loan on the government has major effects on the unequal distribution in the public. Due to the high interest rates middle-class and poor people won't be able to invest much in debt recognition. The highly rich people invest their money and this money is been transferred by the government to create a good economy for the poor people. This creates a huge imbalance among arising towards inequalities in the distribution.
4) Foreign investments-
The rise of the public debt has direct and adverse effect on the foreign investments. Foreign investors will think twice before investing in any new projects in India owing to the high taxes and other legalities involved in the process. The interest rates are also very high which makes it a quite challenging task for the foreign investors to invest in India.
Growth strategy-
The very crucial step is to first acknowledge the debt that is been connected with your government.
When you acknowledge there are high chances of implementing strategies to overcome the situations. Then make sure to modify the debt structure to create more favorable situations while repaying the debts. The government should also minutely observe and analyze the foreign currencies and short-term floating debt rates.
Conclusion-
The rising public debts should be controlled by the current government and they should try to adopt practices that do not hamper the foreign investments, interest rates, consumption and much more. After acknowledging the public debt government should immediately find out ways to resolve the problem and reduce the debts as soon as possible to reduce the burden of general public. Dollar stop is helping you in buying and selling foreign currency in Gurgaon.
Indian Economy Times reference Link1 -https://economictimes.indiatimes.com/news/economy/indicators/soaring-high-end-falling-low-end-indias-consumption-story-splits-in-two-after-pandemic/articleshow/105865911.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
