The World Bank has cautioned India that, though it is not in a “debt trap” now it could get into one if it did not ensure that its economic fundamentals were taken care of and did not rely on short-term funds to bail it out. World Bank officials stated this at a press briefing on the latest annual World Debt Tables — External Finance for Developing Countries. The economic team for briefing the correspondents was headed by Mr, Michael Bruno, World Bank Vice-President and Chief Economist, and included Mr. M. Ahmed, Director of the International Economics Department. Mr. Ahmed said there was no reason to assume that India was in the middle of a debt trap. However, the lesson for India from the experience of the past year, namely Mexico’s current plight, is the lesson which would apply to half-a-dozen other countries that have recently increased their access to private capital flows, particularly relying on the shorter term funds of private capital flows, he said.

PSUs upset over new rules

Several public sector unitsare in a quandary following the recent Government guidelines on investment of surplus funds. The new stipulations are so highly loaded in favour of safety that PSUs have little scope of parking surplus funds in instruments which will earn ‘decent’ returns, say sources. Finance department officials of several PSUs say that their hands are “absolutely tied” and they may end up keeping their surplus funds idle in bank accounts. Among the worst hit, will be State Trading Corporation and IOC. These PSUs are finding it difficult to stick to the new stipulation that their surplus availability may be worked out for a minimum of one year at any point of time.

Related Topics
comment COMMENT NOW