The ongoing economic crisis in Sri Lanka and Nepal symbolizes the wrong policies adopted by the government led by both the countries. However, some economists and experts draw a parallel between the weak fundamentals of the Indian economy and the current economic conditions in Nepal and Sri Lanka. Some have added that these weak fundamentals of the Indian economy could lead to a full-blown economic crisis in the future. However, former finance secretary Subhash Chandra Garg has denied the allegations, saying there is no parallel between India and Sri Lanka in terms of economic situation.
“I do not think that there is any parallel between the crisis in Sri Lanka and the crisis that India may face. Sri Lanka, for many years, has been pursuing a very prudent policy of borrowing extra from abroad without the power to lend. The Sri Lankans are so miserable in paying taxes that they have not been able to raise taxes. They have also been very generous in their spending programs, “said Gorg.
According to him, for the last 7-10 years, everything that could have gone wrong in this policy framework of Sri Lanka has been going wrong. He blamed factors such as poor tax policy, excessive spending and highly intelligent foreign debt, including borrowing from the Chinese, as the cause of the economic crisis.
He went on to explain that the GDP ratio from India’s taxes was somewhat lower and our expenditure management was not so generous or intelligent.
“We have not borrowed too much abroad; in fact, we have borrowed less abroad and most of what we have is domestic. Also, we have very large foreign reserves, which, in fact, add to government spending. Instead of financing less,” Gorg said.
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