New Delhi
Famous economist and former Governor of Reserve Bank of India, Raghuram Rajan has given such advice to all the countries including America, which if not followed, can cause serious dangers in future. He has expressed his concern about the increasing public debt at the global level. Rajan has said that continuously increasing debt can make the world very weak in the time of next emergency. This warning is for those countries which are running their economies by taking huge loans. Mainly America and China are involved in this. But, the danger will also be on those countries like India, whose business runs with countries like America and China. Every activity happening in America impacts India, whereas China is India’s biggest trade partner.
Raghuram Rajan has urged countries that are ‘drinking ghee by taking debt’ to take a look at their increasing public debt. Amidst the threat of increasing epidemics in the world, it is important for a big economist to say this. In fact, great economists take a long view of money and budget and can predict the future. Rajan said, “We have seen the global financial crisis and the pandemic. Such epidemics may become more regular in the future. Therefore, it is dangerous to ignore the increasing level of debt.”
Rajan mentioned many important things in the speech given during the annual Bancor Prize ceremony in Rome. In his speech, he said, there is a need to reform multilateral institutions to save the world from fragmentation. He also suggested that the problems could be solved by services trade, climate action, and opening up trade routes in other new areas.
Big warning regarding America
Referring to America while talking to journalists after his speech, Raghuram Rajan said that the public debt there is increasing rapidly, which is making it financially insecure. According to recent estimates from the International Monetary Fund (IMF), America’s debt is on track to continue increasing. He cautioned that this is not just America’s problem, but is also a warning for many other countries of the world.
Shocking picture of global debt
According to the IMF, global public debt is expected to reach nearly $100 trillion by the end of 2024, accounting for 93% of global gross domestic product (GDP). Countries like America and China have major contribution in this.
Rajan also said that slow inflation and falling interest rates are giving countries an opportunity to improve their financial position. But, despite this, most of the governments do not seem to have any readiness regarding this.
The need to avoid the dangers of debt
Rajan stressed that it is very important to reduce the debt so that a safety cushion can be created for any emergency in future. He also said that countries with excessive debt become unable to help each other, which can pose another threat to the world.
how much debt on which country
According to the latest data of the International Monetary Fund, America has a debt of 121 percent of its GDP. Meaning, he has not drowned till his neck, but the water has reached above his head. Canada is at second place, which has a debt of 106 percent of its GDP. China has taken 90.1 percent debt compared to its GDP. This percentage in India is 83.1 percent. Sudan has the highest debt, which has taken 344.4 percent debt compared to its GDP. France, Spain and England also have debt more than 100 percent of GDP.
