What happened after India eliminated debt? You may have heard a lot about it but do you know what actually happened? Well, the government of India introduced fiscal policy and this fiscal policy is not like your ordinary fiscal policy which involves borrowing funds from banks or other financial institutions. This fiscal policy simply means that instead of creating liabilities and creating more money, the government simply eliminates these liabilities.
How was this done? Well, it was done in a very smooth manner because the economy was so badly hit by the recession that the government simply did not have any choice but to eliminate debt. And this was not possible for the previous government as well. In fact, it was impossible for the previous government to eliminate debt because they had no money at all.
So, what happened? They simply printed new money in the form of currency. The printing of money created more liabilities for the people and thus the economy needed more money to finance the activities. When the people who had excessive debt started losing their jobs and had to pay a hefty amount of money for their unsecured debts, the economy could not sustain any kind of operations. It became bankrupt.
Due to the negative impact on the economy, there was a complete lack of circulation of money. The people were not able to conduct normal transactions and most of them filed insolvency. The result of this was obvious. When there was a complete lack of circulation of money, the cost of living also went down. It was very difficult for the common people to meet their basic needs and expenses.
What happened after India eliminated debt? It is obvious that due to the large scale cash distribution, there was a significant increase in the efficiency of the economy. There was a circulation of cash again and the inflation was reduced. This was the first step to eliminate debt in a successful manner.
The second step was to introduce the concept of personal debt settlement. With the help of this program, almost half of the total amount of unsecured loan can be legally eliminated. This will definitely help the economy to gain back the lost financial strength. Once this is done, the economy will become stable.
The third and important step that was taken by the government when it took charge of the economy was to restore the confidence of the lenders. For this purpose, all the illegal firms were declared illegal and those who were involved in any kind of fraud were punished. Slowly and gradually, the public lost confidence in the money lenders. This was the right time for the government to step in and support the debt settlement industry. The government started directing money supply to the lenders along with indirect aids. It was indirect financial help like lower interest rates and more relaxed terms that helped the credit card borrowers to settle their liabilities.
Overall, what happened after India eliminated debt is a positive story for the global economy. This story showed that no matter how large the problem may be, the solution always lies in the form of negotiation and settlement. Today, the finance sector has really been transformed because of these two procedures. This is the main reason why many people consider India as a reliable destination to get rid of debts.