Rating agency Moody’s Investor Service has pegged India’s growth rate at 9.1 per cent for 2022. But according to a report, even at nine percent growth, India will remain in trouble. In the report, giving the example of Japan, it has been assessed that like 20 years ago, all the efforts to handle the difficulties on the economic front failed, similarly something is expected to happen in India too. Even today Japan is deeply in debt.
According to a Forbes report, India’s PM Narendra Modi is working on the same lines as Japan’s PM Junichiro Koizumi did 20 years ago to get the economy out of the debt vortex. When he became the Prime Minister of Japan, Japan’s debt was 104 percent compared to GDP. The then Japanese PM had prepared a draft to cut expenditure on public works. But even after that, he is considered the person who ruined the economy of Japan. He privatized Japan Post. It is considered to be the largest savings bank in the world.
Attempts to create jobs plunged Japan into debt. This thing was seen more in the later 90s. However, Koizumi’s team was successful in getting the banks out of bad loans. Since 2006, all Japanese PMs have followed in his footsteps, due to which today Japan has a debt of 256 percent of GDP. This is 146 percent more than during Koizumi’s time.
In the context of India, Modi and his team are patting themselves on the fact that the growth rate is estimated to be 9.1 percent. Rating agency Moody’s Investor Service had earlier given India’s growth rate forecast for 2022 at 9.5%. But now it has been reduced to 9.1 percent. Moody’s said the government’s capital expenditure is likely to be limited due to costlier fuel and increase in fertilizer import bill.
The GDP growth forecast for 2023 has been retained at 5.4 per cent. This setback is likely to come from the Russia-Ukraine war. Moody’s has said in its report that the Indian economy is recovering rapidly after the Corona epidemic and the second wave. Last month, Finance Minister Nirmala Sitharaman has talked about spending on big projects. But with this, the budget deficit is estimated to be 6.4 percent in the financial year starting April 1. It looks good because in the last financial year this deficit was 9.3. The government will work to reduce the debt from the tax figure.
However, the good news for India is in the case of bad loans. The government is trying to overcome them. But it cannot be denied that the hopes of the government regarding 2022 may not be dashed. Buying cheap oil from Russia may sound good for a moment but it is going to prove to be harmful in the long run. The last ten governments of Japan can become an example for the Modi government. If the government does not take bold steps, the growth of 9 per cent can become a reason for being buried under huge debt.