Also, it fails to address an important part of the national debt problem, foreign debt, and the foreign exchange needed to repay it. As a result, it has been possible to retire debt, only to contract it again at a lower rate of interest, in a process known as debt switching. What this has meant is that Rs 850 billion was saved in the last fiscal year, and it is estimated that Rs 800 billion will be saved in this fiscal. However, while rupee-denominated debt has declined to Rs 80 trillion from Rs 80-5 trillion, dollar-denominated debt remains the real problem. Retiring foreign loans early might a possible pathway to easier debt management, but is not possible without increased exports, because it cannot be accomplished merely by government action.
