The Great Indian debt, continues

"The toad beneath the harrow knows  Exactly where each tooth-point goes.  Te butterfy upon the road Preaches Containment to the toad”

“India will not remain, and ought not to remain content to be a hewer of wood and a drawer of water for the rest of the Empire.” - J. AUSTEN  CHAMBERLAIN, Secretary of state for India, in the London Times, March 30, 1917.FROM THE PUBLISHER

A very few people know that a very big cause of India’s post independence poverty is the interest of the loan of 1800 crores for which responsibility of repayment was inherited by Government of Independent India as per Transfer of Power Agreement.

To really appreciate value of 1800 crore rupee in 1947 you will have to take into account that exchange rate of British Pound was at 13.50 rupee per pound, exchange rate for American dollar was 5.00 rupee per dollar, and Pure Gold was selling at 88.62 rupee per 10 grams.  Now since all currencies British pound, American  dollar and Indian rupee have devaluated due to infation we will have to take value Pure Gold as a benchmark. Reader will have to remember that in last 60 years gold mines all over world are producing gold worldwide at cost much less then prevailing gold price and increasing availability of gold worldwide. So in no way true value would have gone up in last 60 years but reduced but we are assuming to remain the same as it was in 1947. In June 2012 pure gold is being traded at Rs. 30,000 per 10 grams. Taking pure gold price as benchmark the value of debt inherited by Government of Independent in India comes at 6,09,274 crore rupee at current rates. Out of Debt of 1800 crore rupee inherited, 650 crore rupee was to be paid to Britain. Out of this 1800 crore rupee loan, Pakistan was to pay Rs. 300 crore to India, out of which it have not paid even a single rupee till now.  Maintaing people’s expectation of tax cuts and paying interest on 1800 crore at 3% per annum was a really difficult task in hand for Government of Independent India.

For this, very drastic steps were taken. Gold Import was banned to save foreign exchange, Income tax was increased highest slab being at 60 percent and additionally National Saving Certifcates of 10 percent needed to be purchased compulsorily. 

Employee Provident Fund was introduced with aim of financing governments Debt repayment to Britain. Indian Government kept financing repayment of interest and principal with fresh loans and continuing it still. Interest rate have varied from 3% in 1947 to 18-20 percent in 1985-90 to 12% in 2012. If we take average rate of interest at 12% the loan would have become 28 lakh crore rupee.  Total government loan  is 40,70,320.68 crore rupee.

Drain of wealth is still happening from India to Britain and USA. When a skilled person migrate to Britain or London, along with him goes rare skills which were acquired on indian money (weather his father’s or tax payer does not matter), Britain take back more than half of remuneration for these skill in term of exorbitant prices of accommodation and heavy taxes. The saving of these people also remains in Britain, this way Britain is able to keep all remuneration of the skills in Britain. This skill help Britain take world's money to Britain by exporting products developed by these skills. India spend money on harboring skills and Britain make money on that. In the end when parents living in India dies these people sell ancestral properties built by savings of generations and take that money to Britain. Next generation which is born in Britain is surprisingly lacking in education and skill and end up taking petty jobs. It looks like even a good earning person in London can't afford good education for their kids, otherwise it would have not been the case. After one or two generations decedents of these people are in state of penury.

When a rich person emigrate to Britain, along with him goes saving of many generations. At least half of the money a person took with him is taken over by government in terms of taxes and exorbitant price he pays for ordinary accommodation which would have not got any buyers if Indian people would not take indian money there. Taxes are very high in Britain and USA, government uses tax income for welfare of native people and Indians don't get benefted by these welfare schemes. After one or two generation, when money, the family took from India is exhausted, NRIs have to live in humiliating conditions and take up jobs which Indians are ashamed to associate there name to.

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