Did you know that the govenment would collapse if it did not borrow money?! Its expenditure is much more than its income (revenue), aka fiscal deficit. It has borrow considerably sums of money from you and me (diretly or indirectly) to service its debt. Therefore, the government is in a debt trap (which is quite common!).

If a bank is requested to lend money to us, it wants to know how credit-worthy we are or what our CIBIL score is. We lend money to the government all the time - as often as each month (or less). Do we stop to ask, What would be the CIBIL Score of the Indian Government?!

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My mother retired 13 years ago and started receiving a pension that was indexed to inflation. Not only did it increase twice a year, thanks to DA hikes, it also increased as a result of pay commissions. The average year on year growth of her pension is close to 13%. This is an astounding number - not for her, but for the government who has to pay a similar pension to the lakhs of central and state government pensioners.

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The RBI governor will no longer have the final say on monetary policy! The finance minister during his budget speech had said, "The RBI Act 1934, is being amended to provide a statutory basis for a Monetary Policy Framework and a Monetary Policy Committee through the Finance Bill 2016".

Yesterday in a statement, the government announced the constitution of the Monetary Policy Committee (MPC).  Outgoing RBI Governor Raghuram Rajan has always been supportive of a committee-based decision making.

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In a close referendum which saw 72% polling, about 52% of Brits want to leave the EU. Amid all the noise and adjectives being thrown around, we should recognise that Brexit is a process and not an event. Life will find a way to get past this.

Soon after early trends became clear, the pound fell sharply against the dollar (hence stabilized) and so did markets around the world. At the time of writing the Sensex is down by about 3.75%. Is this a knee-jerk reaction? Yes, but that is how the markets always react.

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We all understand the importance of living within our means and strive to implement it on a day-to-day basis.  If the Indian government manages to do the same over a financial year, it would grab headlines!

When I heard about the term fiscal deficit (expenditure > revenue) for the first time, I was shocked to learn how the government routinely spends more than it earns and finances the deficit via borrowing from market participants (which includes us, AMCs, banks etc.).

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