Before some of our rural folks can even count and talk in thousands, the state of nature in our country has reached such a dramatic phase that we talk of BILLIONS in debt! Forget about billion, many people may not even know how many zeros are there in a million!. Now the question before us is not about knowing number of zeros in millions. It is not even knowing how many more zeros are there in billion!
As a developing nation and more in the vein of a nation that advocates 'small is not only beautiful, but far beyond', the need to understand about our BIG DEBT is of paramount importance. The burden and benefits of our debt is suppose to affect us all 'equally' and therefore, the issue of public debt cannot be confined to the realms of only Policy makers, Economists, Bureaucrat and likes of others. Reallocation of resources and and its availability are key for any kind of development. This universal statement asserts that for a any country to develop, resources both in terms of monetary and natural form are mandatory.
Bearing above universal statement in mind and applying it to our economy, we get a totally unique situation. Except water, we are neither rich in natural resource nor in our tax income! So the only solace we had was in external debt, which is soaring so high that now some people are having problem seeing its tail. No doubt, we have plus point to discuss about debt too, but for now lets keep that topic for another post.
As reported by Kuensel, our total debt stood Nu.17 billion in 2011, which is an increase of 8 billion form 2010. It is also reported that our export earnings have more or less remained same. This statement testifies that we have spent more than what we have actually earned! Rupee reserve fell into negatives! Further, this deficit has taken our debt ratio to a frightening level of more than 99.2% To a lay man, it just means that out of 100 Ngultrum we have, 99.2 Ngultrum do not belong to us!
And our government has done their part of soothing the people. More than half the nation's population do not even know what this public debt is all about. To marginal few, our government has always justified the rationale behind the soaring debt by saying that those debts are "self liquidating" in nature and that it will service it self. The lions share of such debts came from our friendly neighbor India. Strictly speaking in economics, there is no such 'self liquidating' debts in this modern age. It was a concept that died long with those classical economists'. 'self liquidating' debt is like 'money for nothing' and we have a reason to doubt when our government says that India is giving us the money of Indian taxpayers for nothing. Unless Economists' in India have a pair of horn, I see this as a grim possibility.
And our government has done its part to control the deficit that is growing in size like a wild fire too. Tight monetary measures and stringent fiscal measures have come in place overnight. Already crowded out and malnourished private sectors are hit the hardest. Blanket suspension on certain imports created inflation, where as blanket suspension on loans threatened many from defaulting! The story does not end there. Interestingly, there were also reports that our Government came looking for more rupee in India. This was by far the most ridiculous analogy in the history debt management. -One side, we were made to reduce consumption whereas on other side there was our government, still desiring to go spendthrift.
As a nation we have long night ahead. The debt is mounting and so is cost of debt. Every night our country is becoming indebted by billions. While we have many visible signs of crises, our Government is still adamantly hanging on to their belief which says otherwise.
And I am going to bed every night wondering how a country that advocated small thing ended up with big debt.