Bhagirath Baria

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The Author of this blog has keen interest in understanding Economics and its implications on the Individual and the Economy as a whole. Has been writing articles and analysis of issues that may skip general observation, but exert deep influence on people's lives and their decisions. Discussions and Debates related to conventional as well as non-conventional Economics is done here. The author of this blog doesn't classify himself to any particular School of thought in Economics. He is tilted toward Mainstream Economics, though has keen interest in a few Heterodox schools too. Wishing all the readers a truly enriching experience.

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Rath & Economics by Bhagirath Baria is licensed under a Creative Commons Attribution-NoDerivs 2.5 India License.
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Wednesday, October 13, 2010

The flip-side of the Chindian "Loan War"

Its a saying "its better to have a few strong neighbors than to have 100 weaker ones". I think this is the crux of the "LOAN WAR" going on between India & China. We are regularly hearing about the loan war going on between these two emerging giants. This term "loan war" sounds quite familiar to a well-known word "currency war" that's hooking up the "developed vs developing worlds" negotiations & talks.

Loan War has been used in reference to the "constant grants & loans being given to the very slow paced developing nations of Bangladesh, Nepal, Myanmar, etc. by the two fastest growing economies of the World, yes your guess is right, India & China. India's latest move to provide a low-interest rate Loan of $1 billion to Bangladesh in a subsequent move to tackle Beijing's growing influence on these nations is a "go gaga" for these nations. How? The fact is that whenever such a friction happens for winning the "trust, support & backing" of the LDCs(Least Developed Countries), it creates a huge economic pool of resources for the nations receiving these benefits.

The flip-side is that whereas the two nations are having a sort of tug of war to have a greater influence, the receiver nations' are getting better & better opportunity of growing their key infrastructural facilities as this is the major area of financing by Chindia. In such a scenario, we can hope that at least the LDCs would get an opportunity to overcome their growth barriers & expand their internal immune system to an extent that nothing can stop them to grow, at the end of the day its going to benefit all.

Its very much essential that such financial assistance doesn't go waste & is utilized to its best. Hope this fact is appreciated & observed by the receiver nations. Your views are always welcome. Do express it.

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