Country: IndiaCommittee: World Bank Delegate: Syeda Bisha FatimaTopic:Debt of developing countries Although India’sdebt clock is $1.1 trillion with an interest rate of $2,282 per second, India’seconomy is rapidly advancing and as of 2015 India’s economy surpassed Chinabecoming a fast-growing major economy. The fiscal year of 2015-16, India’seconomy grew by 7.6% which lead to India topping the World banks growth outlookfor the first time. While India’s economy fell in the year 2016-17 from7.
6% to 7.1%, a drastic fall, it is still believed that the economy will riseagain for the years 2018-2019 to 7.2% due to India’s young population,investing rates and healthy savings.
India’s economy ranks fourth worldwidecurrently after China, the European Union and the US. India’s rapid growth evenafter the Great Recession has reduced poverty by 10% in the past decade.India’s economy is currently stable but not completelyimmune to world threats.
For an economy which has emerged from ‘problematic’ tobeing among the worlds greatest economies, there have certainly been issues inuplifting it. The International Bank for reconstruction and Development (IBRD)and The International Development Association (IDA) have allocated loans to Indiawith the purpose of improving transport, power, water, health, education,agriculture, irrigation and demolish poverty.The main issue now is that the loans provided for acertain act don’t always reach to fulfill its cause. In 2015 The agricultural land was used up only46% and most of the goods produced are lost to spoilage. 25% of the teachersfrom the public sector and 40% government owned medical workers have beenreported as absent during work times, yet consuming complete salary. However,on a positive note, the healthcare is expected to grow at a CAGR of 29% from2015-2020. On 31 December 2015, India had returned $37 billion of the $73billion of the world bank.India has recently made a deal with the UAE where bothsides invest in the others country and it is worth $53 billion.
On their firstcrucial meeting in New Delhi on January 2017, India and UAE signed several agreementsand memorandums of understanding (MoUs) which consisted of oil, maritime,defense, road transport, innovation, technical, security and trading fields.Likewise, India is an attractive platform forcountries to invest in, “Many foreign investors may be motivated as muchby fear as by optimism—compelled by the belief that they must invest in Indiato achieve their ambitions, even though they know the risks are great and theoutcome is highly uncertain,” said White & Case corporate lawyers.US topsthe list of foreign investors in India followed by maturities, Singapore, UK,Netherlands, japan, Cyprus, Germany, France and UAE.India’s economy has been reported repeatedly asrapidly growing although being the world bank’s top borrower from 1945-2015 andpaying off the debt of $1.1 trillion, $925 per citizen, is incontrovertiblystress-free. Yet India is not able to do so because of poor tax collectionrates, corruption, poverty in rural areas and lack of infrastructure. India hasbeen trying its best to come up with resolutions which will contribute inresolving the basic problems of India.In many of the recent years, India has been ranked amongstthe worst countries with corruption including black money, in which Indiatopped the list in 2006, and bribe accompanied by absence of workers duringwork hours and large and inefficient bureaucracy budget consumption.
Even tough taxes which will unify India in the marketare put such as the GST, tax collection rates are still poor. In 2013, only 1%of the 1.23 billion people paid their taxes. Many taxes are not paid, and some taxcollector officers are not regular and tend to ‘laze around’ on their jobs. Thetax collected is used to pay off the debt as well as provide goods and servicesfor the common citizens, who, due to the few percentage of the population thatdo not pay have to suffer as the government is not able to generate enoughmoney to be of aid.
India does not invest a lot in infrastructure as italready has its hands full with corruption, health care, education, taxes. However India’s economy is 60% services andtherefore a need of infrastructure is imperative and shall help boost thecountry’s investments.In the imperative form, the focal question is artless,how to rid India of its debt of $1.1 trillion?The solution is clear. In order to pay off the debt,the money is collected from investments and taxes, mostly. Therefore the governmentshould enforce strict laws on tax collection and put a penalty if they are notpaid.
Continuing, India should work on developing its infrastructure. Take upprojects which will be of benefit in the far future and design structures thatwill attract other nations to invest in. To combine it into one, the Indian Bankshould lower the interest rates so that manufacturers would borrow the moneywith content and construct something effective and efficient. A tactic used bymany other countries, India should also cut spending’s and raise taxes.
In assistanceto the above resolutions, India should also do Pro trade/Pro business. Indiaranks within the top 10 countries for organic production which they can tradeand earn foreign currency from. India supports all means of reducing its debtand looks forward to talking about it at the World Bank.