jairamesh Posted June 19, 2012 Posted June 19, 2012 So' date=' Does this "gift" break the bank? I am no financial expert but I'm curious. We have states in debt in India, poverty and other things. [b']We ourselves receive money from countries like UK. Does this gift make sense? Again - please don't pounce on me. Just trying to understand how this works. That's why the Brits are still smarting our the recent Medium Multi-Role Combat Aircraft being awarded to the French. :hysterical: They have already lodged an appeal to redo the bid.
Crookbond Posted June 19, 2012 Posted June 19, 2012 India can donate to IMF yet it's rates to borrow in the international market (bond rates) are higher than Spain who are bankrupt. :hysterical: That's bent capitalism for you. :omg: This is interesting. What would be the solution though?
velu Posted June 19, 2012 Posted June 19, 2012 India can donate to IMF yet it's rates to borrow in the international market (bond rates) are higher than Spain who are bankrupt. :hysterical: That's bent capitalism for you. interest rate is directly proportional to inflation . indian inflation rate is close to 8% but Spanish inflation is close to 2%
Anonymous Posted June 19, 2012 Posted June 19, 2012 Its not just India, all the other BRIC countries are contributing $10 bn each to IMF and not to the EU directly. The only demand put forth to IMF is that more rights be given to the each of the BRIC countries.
vipin Posted June 19, 2012 Posted June 19, 2012 This is more like putting your money where your mouth is. They have been shouting at the IMF all these years to give them rights. Now they need to prove they're worth it. But.. doesn't it appear we're just paying to be made a fool of, at a magic show(IMF) organized by the western countries.
seedhi Posted June 20, 2012 Posted June 20, 2012 interest rate is directly proportional to inflation . indian inflation rate is close to 8% but Spanish inflation is close to 2%No no, what he meant was that India pays a higher interest rate than Spain for the same amount the two borrow in the international bond market. Ironic since India seems more robust than Spain.
Precambrian Posted June 20, 2012 Posted June 20, 2012 No no' date=' what he meant was that India pays a higher interest rate than Spain for the same amount the two borrow in the international bond market. Ironic since India seems more robust than Spain.[/quote'] There are lots of reasons for that... bonds face competition from internal equity markets as well.. i.e if India's equity markets are promising investors returns of more than say 10%, obviously bonds will have to live up to that... so naturally bonds will also become pricier... and as Velu said, inflation plays a big role in determining the coupons on the bonds - if a country's inflation is say 6%, bonds will have to offer more than that or otherwise it wouldn't make up for the opportunity cost or time value of money for the investor who decides to get locked in that investment.... Australian overnight rates are around 4.5%, whereas that of UK, US etc are less than 1, doesn't mean Australian markets are any less robust than that of Spain...
Crookbond Posted June 20, 2012 Posted June 20, 2012 Retail inflation inches up to 10.36% in May Based on the Consumer Price Index (CPI), the inflation for April was revised to 10.26 per cent from the provisional estimate of 10.32 per cent, as per the government data release here on Monday.
seedhi Posted June 20, 2012 Posted June 20, 2012 There are lots of reasons for that... bonds face competition from internal equity markets as well.. i.e if India's equity markets are promising investors returns of more than say 10%, obviously bonds will have to live up to that... so naturally bonds will also become pricier... and as Velu said, inflation plays a big role in determining the coupons on the bonds - if a country's inflation is say 6%, bonds will have to offer more than that or otherwise it wouldn't make up for the opportunity cost or time value of money for the investor who decides to get locked in that investment....Of course there are many correlated indicators to the bond interest rate. But intrinsically the bond interest rate should represent the risk associated with the debt. It probably has to do with accumulated debt, trade/fiscal deficit, balance of payments etc, on which India is still on a sticky wicket.
akshayxyz Posted June 20, 2012 Posted June 20, 2012 Must be pocket change for Raja/Kalmadi/Jyalalitha/.. kind.
velu Posted June 20, 2012 Posted June 20, 2012 No no' date=' what he meant was that India pays a higher interest rate than Spain for the same amount the two borrow in the international bond market. Ironic since India seems more robust than Spain.[/quote'] its because our interest rates itself is quite high comparatively ( RBI interest rate is 8% and CRR is 4.75% ).. what i meant is interest rate has far more weightage than the money needed to insure the loan ( google CDS ) if you borrow 1L in india and do nothing for an year , its actual worth after an year is 90K but in spain if you get 1L Euros and do nothing , its actual worth after an year is 98K Euros
Crookbond Posted June 20, 2012 Posted June 20, 2012 ^ So, cutting the chase it's ultimately inflation with affects the "value"?
velu Posted June 20, 2012 Posted June 20, 2012 ^ So' date=' cutting the chase it's ultimately inflation with affects the "value"?[/quote'] yep.. inflation affects the value of the money..
Crookbond Posted June 20, 2012 Posted June 20, 2012 yep.. inflation affects the value of the money.. Oh hell, I know that. What I meant was - Should our "donation" decisions be made on inflation?
CG Posted June 20, 2012 Posted June 20, 2012 Oh hell' date=' I know that. What I meant was - Should our "donation" decisions be made on inflation?[/quote'] Of course not ,I think its more political than economics.brics had this golden oppurtunity to make imf bend as us is not yet giving any aid for europe and they have tried their hand,But its unlikely imf will change so money may as well remain with us and imf is still going to be the last resort.
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