JUDGMENT FROM AUGUST 2014 saw the debt jubiilee in India, where the Government was forced to raise billions in public money to cover a shortfall in revenue.
This time around, it’s all about the people, and the new government wants to take a more public-spirited approach to debt repayments.
A week after the jubiile, Prime Minister Narendra Modi announced that the debt-free year would start from the 30th of August.
He said it was time to “change the way people are thinking about debt”.
But is the jubilee just another attempt to please the country’s citizens and convince them that there’s more to debt than just the amount they owe?
The truth is, there’s plenty to be gained by doing everything possible to reduce our debt, says Professor Javid Srivastava, the director of the Centre for Economic Policy Research.
It is a much more practical way to help the country recover from the effects of the global financial crisis, he adds.
But how much will people actually pay?
If you are an Indian and you owe the government money, you might want to think twice about taking out a loan.
The Government already requires debtors to repay up to 50 per cent of their outstanding loans in full, but most people don’t want to take on that debt.
In a recent survey of households, just 4 per cent said they were willing to take out a full-fledged loan to help them get out of their debts, compared with 40 per cent who were willing.
In fact, a new study published in The New York Times last month suggests that there are some people who would pay more to get out from a debt than they would if they took out a private loan.
While this doesn’t necessarily mean you’d need to get a loan from a bank, it suggests that you might need to be careful with your debts.
Dr. Srivadav says people should be prepared to pay a little extra to get the same amount back, even if it’s only for a few months.
He says this could be used to offset the cost of a new car or a new house.
The best way to get rid of debt, he says, is to take charge of it and take a long-term approach to managing your finances.
In the meantime, you can find out how you can get rid at a new website, DebtJubilee.org, which is available for free to anyone who wants to help.
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