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Like Greece, Pakistan and Sri Lanka have relied heavily over the years on overseas borrowing.
Such an outcome would hurt investor sentiment and push overseas borrowing costs up for Indian companies.
There have been worries for years about the global imbalances caused by America's huge overseas borrowing.
Overseas borrowing is now at record levels, with nearly half of our publicly held debt in foreign hands.
With investors willing to lend in local markets (and often in the local currency), they have sharply reduced their overseas borrowing over the past decade.
Deficits would indirectly be making us poorer if they were either leading to big trade deficits, increasing our overseas borrowing, or crowding out investment, reducing future productive capacity.
Similar(45)
An American company looking to expand overseas might borrow a loan denominated in US dollars.
And it turns out that overseas banks borrow less in the UK than the Treasury and HM Revenue and Customs thought.
Even city governments were borrowing overseas.
Russia was effectively barred from borrowing overseas after the August 1998 economic crisis, when it defaulted on domestic treasury bills and stopped making payments on its debts to foreign banks and governments.
Companies thus turned for loans to India's unfashionable state banks, which hold almost 70% of bank assets, rather than borrowing overseas or raising money on the stockmarket.India's growth was also shored up by government outlays, such as a generous pay rise for state employees, the cancellation of small farmers' debts, and the expansion of its rural-workfare scheme.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com