Taking debt to grow is actually as ridiculous as it sounds. Unfortunately it did not really sound too ridiculous to the experts and policy makers of the western world.
But the truth is that it is a flawed business model as at some point of time or the other the debt would need to be paid back.
This is exactly what the head of the world’s largest bond fund, Mr Bill Gross, has to say. In his view ‘debt driven growth is a flawed business model when financial markets no longer have the appetite for it’.
Investors all over the world have become wary of countries that declare new debt programs to fund future growth. They no longer feel that that is the right way to go.
They have been proved right by the crisis that both the US and the Euro zone have seen in recent times.
In his opinion, it would be better for countries to adopt fiscal tightening and deleveraging measures to gain back the confidence of the investors. Just mounting up more debt will not help in any way.
If debt is bad for a country or a corporate as whole, the same same applies to individuals. The historical aversion of Indians for debt is a wise habit built into their genes.
Are the younger generation of Indians feeling proud about this evergreen quality of their parents? or would they embrace westernism blindly to ruins by over dependence on credit cards and neck deep borrowings.
If they are wise enough, they can see the results of both practices right in front of them.