EXTRACTS FROM MANUSCRIPT, “WHAT AILS INDIAN ECONOMY”
While India has incurred more foreign debt than is required, it has contracted less domestic debt than is required to meet the legitimate development needs. According to the Reference Manual, “India 1998”, the total domestic debt in 1997 is Rs. 334914 crores which works out to about Rs.3500/- per person. (per capita foreign debt is Rs.4300/-)
Most of the developed countries have much larger per capita domestic loan than India whereas in India, external debt is higher than internal debt…….
……thee is absolutely no valid reason for not incurring more debt to Reserve Bank of India ( this is same as printing currency notes) to meet the developmental needs. The total, both domestic and foreign debt per capita comes to only about Rs.8000/-. The total debt of USA is over $ 5 trillian( $500000crores or Rs.22000000crores)(in 2004 over US$ 11 trillion) and the per capita debt is over $20000 or Rs.860000(approximate) which is about 100 times that of India. Japaese Government’s debt is US$4 trillion-$400000 crores or Rs.17500000 crore. The per capita debt is Rs.15,00,000 which is about 180 times that of India. In the case of most of the developed countries the per capita debt is much higher than in India. The countries could develop only because of the high debt and the fact that they wanted to rely on themselves……….. since Nehru’s time…the elite, intellectuals, economists, administrators etc. justify their inaction/indiffdrnce to the needs of the people, by saying that India does not have resources to undertake large projects and hence the problems of the people could not be solved.
One of the two major reasons for the economic backwardness of the country is the theory…….that India did not have resources.(the other one was that India was over populated…..these leaders did not understand that manpower is the main resource. Instead of utilizing the manpower they went about taking of reducing population growth by introducing family planning programme even as early as 1950s when the density of the population was even lower than that of many European countries.
The secod resource is land. India has sufficient cultivable land even today-i.e. even when the population has increased and the government had encroached upon fertile land for non-productive purposes..
The third resource is money. The leaders did not understand that money at that time was coins and currency notes.(In 2000s it is cheques, credit cards besides currency notes.) While coins are expensive to mint,currency notes could be printed easily by the Reserve Bank of india and the government could have borrowed from the Reserve Bank…….
Even after more than 50 years of independence,there are villages which do not have lakes and which they need and where there is possibility for lakes. Even in the 1990s/2000s, there is need and of course, scope , for thousands of canals of hundreds of kilometres etc. For these works,what is required is just simple tools which the village artisans can make,man power and cattle energy,which the country has in abundance and also local-Indian currency to which the government has unlimited access. There is no need for the government to sign Memorandum of Understanding with Reserve Bank of India on limiting deficit financing. The monetary and other policies of the government are to be decided by the elected representatives of the people and not by officials of Reserve Bank of Indian who are not answerable to the people.