India’s fundamentals have deteriorated steadily under Mr Singh’s government. Since 2007, the current account deficit has exploded from $8bn to $90bn; it now equals 5 per cent of gross domestic product, twice the level academic studies suggest is sustainable. Meanwhile, many corporations have been on a borrowing binge. Since 2007, borrowing by the 10 most indebted companies has risen sixfold to $120bn, with much of it denominated in foreign currencies. One in four companies does not have the cash flow to cover its interest payments adequately. Total short-term external debt has risen from $80bn to $170bn. There is talk in New Delhi that, for the third time since the crisis of 1981, India may have to appeal to the International Monetary Fund.
Posted on: Mon, 26 Aug 2013 09:00:02 +0000