ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Calcutta Diary

August 30, 1986 Calcutta Diary AM WE aspire to arrive at a Latin American situation, we are not yet quite there. Nations borrow to pay the interest on what they had borrowed in the past. It is a function of time, the quantum of such borrowing keeps rising. Other things not intervening, the interest charges are likely to rise, from 20 per cent of export earnings, to 30 per cent, 40 per cent, 50 per cent, until the moment comes when the export earnings of a nation have to be used up in toto to meet the interest burden alone of past borrowings. The nation will, in addition, have to repay every now and then, bits and pieces of the principal amounts borrowed. It will need to buy foreign goods too. So it will have to borrow even more. More, more and ever more, the drawal on the nation's current income, so as to meet the obligations to foreigners, will be higher and higher still. At some stage, since no export earnings will be left with which to meet the full charge of the repayment burden, foreigners will come and establish legal claim on the nation's assets. In due course, the time will arrive when the entire national income will have to be handed to foreigners as payment against past borrowings. Allegorically speaking, the nation will then cease to exist.

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