An economy built on the sand of debt.

While ministers were swanking about at the World Economic Forum in Davos, Switzerland on our money, our business fellows were living it up on borrowed money. After the dot com collapse of 2001 interest rates were in low single digits in the US and Europe. Looking for higher returns foreign fund managers poured money into India stocks and real estate companies. After the sub-prime crisis of 2008 interest rates fell to zero in western countries allowing the RBI to keep our rates at very low levels. Property prices rose to levels higher than in the US, share prices were zooming and our fellows went on a borrowing binge. The outstanding debt of 10 large corporate groups multiplied six times to Rs 6.3 trillion or Rs 6.3 lakh crores which is $100 billion. Mint, 6 September. Needless to say politicians were also guests at the party. Firms were allowed to borrow $500 million under " automatic approval " route and this was later raised to $750 million. Our external debt has risen to $390 billion on 31 March 2013 compared to $345.5 billion last year. ET, 7 September. Short term debt rose to 24.8% compared to 22.6% last year which would amount to $80 billion. However if we add long term debt which will be up for repayment then our external debt goes up to 44% of total external debt which would be around $170 billion. Our foreign reserves have fallen to $275 billion because of the RBI's efforts to support the rupee by selling dollars. Non Performing Assets of banks have risen to 5% of total loans. Banks have restructured Rs 2.5 trillion of loans under the Corporate Debt Restructuring route. HT. 6 September. They are now asking business fellows to provide personal assets as collateral before agreeing to restructure loans. As usual the biggest villain is the Congress led government which continues to burn taxpayer money regardless of consequences to win the coming elections in 2014. In 2008 they increased salaries of useless civil servants by 80% permanently saddling the nation with a huge annual expense. This time round they have just amended rules so that the government will bear expenses for 2 months treatment abroad, including air fares. ET, 7 September. Air fares of the person accompanying will also be paid. Like a house built on sand our economy is built on debt. We will feel its fall.