Lead Story

India’s flirtation with the dollar could be risky

The liquidity glut notwithstanding, the government’s plan to raise dollar debt will come at a price 


In Confessions of a Shopaholic, the lead character Rebecca Bloomwood is addicted to shopping. She cannot resist a good sale and spends much more than she can afford to and ends up heavily in debt. Becky (as she is called) is chased around New York City by a collector, assigned by her credit card company, but she still cannot stop her splurging. Of course, later into the movie, she runs into a crisis and, to get out of it, goes into rehab at Shopaholics Anonymous, changes her ways and pay off her debt. Everyone is happy. 

What if, the story had taken another direction? What if, when the crisis hit, Becky had access to loads of rich acquaintances who were just flinging money around? Then, the story may have ended darkly. It could have ended with Becky continuing to spend, increasingly indebted to strangers, and ultimately having a breakdown. Perhaps, she would have had to be institutionalised.

India is not exactly Becky, spending extravagantly on cashmere coats and suede boots, but it is living way beyond its means. In fact, the country is one of the most indebted among emerging markets. And today, it is faced with a fiscal crisis, and has run into a world where plenty of liquidity is just sloshing about, thanks to the 2008 global financial crisis and now the pandemic. The world’s central banks have pumped in a whopping $21 trillion — equal to a quarter of global GDP — since the onset of the pandemic.


You don’t want to be left behind. Do you?

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