Chief Economic Advisor, Dr. Anantha Nageswaran, raised the issue of debt vulnerabilities of emerging and advanced economies which will be the focus of India’s attention. He pointed out that issues such as fallout and debt vulnerability are no longer confined to a single country, but rather the challenges faced by cross-border countries.
Nageswaran was addressing the 14th annual session of the G20 International Conference organized by the Indian Council for Research on International Economic Relations on Tuesday.
The chief economic adviser said that the monetary policies adopted by several advanced economies have an impact on emerging economies and that it is incumbent on each of them to solve these global economic problems.
According to Nageswaran, “debt vulnerability is a problem that not only affects developing countries but also those that are considered developed over the years.” He argued that the challenges imposed by debt vulnerability are also linked to global capital outflows.
According to the CEA, the challenge becomes even more difficult for developing economies as they face the heat of the fallout as well as that of capital flows from advanced economies.
The situation becomes more complicated for emerging economies as advanced economies do not reduce or take action on their capital flows, he added.
Nageswaran highlighted how the monetary policies of the past 20 years must be studied to understand the deficit while talking about the measures of the Reserve Bank of India (RBI) and other central banks to deal with the fallout from advanced economies.
When we talk about fallout, we must consider the monetary policies of the last 20 years, the CEA further specified. “Quantitative easing, zero interest rates, and miniscule rates all drive up yields on safe assets.”
Global debt has increased by 28 percentage points to 256% of GDP in 2020, according to the latest update of the IMF’s (International Monetary Fund) Global Debt Database.
Government borrowing accounted for just over half of the increase, as the global public debt ratio hit a record high of 99% of GDP.
Minister of Finances Nirmala Sitharaman recently addressed the fallout issue in a meeting with the IMF (International Monetary Fund).
She said that in the short term, advanced nations should take responsibility for the global fallout from their political and economic decisions and put in place safety nets rather than imposing sanctions on nations, which fulfill their moral and democratic obligations. towards their people.