Thanks Mr. Ron.

Total external debt per Reserve Bank data on 31, Mar was $390 Bn. The rupee debt is quite small. Of this short term debt constitute 25% or $96 Bn. If you dig into the overall external debt figure you will see corporate borrowing is over $120 Bn. I agree that debt is debt, but it's unlike other countries where sovereign debt (raised to fund public welfare and govt excesses) was high in relation to capacity to repay. This corporate $ debt is not all pervasive. It's among a few companies which have loaded significant amount of debt to fund their overseas acquisitions in pre-GFC era.

India's Current Account Deficit of +4% is worrying. CAD, as acknowledged by the govt themselves, should be in the 2.5% zone for long term stability. Now, studies show that it is not necessary that currency depreciation follows expansion in CAD deficit. In fact it's in India experience that it saw currency appreciate even when CAD deficit widened. Neither do I agree with experts who attribute recent currency fall to inflation differential. Look at the inflation numbers (CPI) from 2011. It's mostly in double digit or high single digit every month. The differential with DM always existed. So why didn't currency correct then? Why did it take so long?

I think the answer to that is that one is global growth has slowed and India's growth differential with DM has narrowed substantially. Two, there is always role that speculators play. They amplify bad news to their advantage.

Another point is unlike other EMs (including Latam) $ inflows into India didn't create asset bubbles - in equity, debt or currency or real estate. You may argue on real estate that Mumbai is a bubble, but I would say Mumbai real estate has always been precious asset, with or without easy liquidity. It's because the city is India's only financial centre and simply keeps attracting best talent from all over the country.

Also look at Indian consumer spending. Do you know only 2% of Indians hold credit cards? Do you know less that 25% Indians are connected to formal banking system? Credit card and education credit as on FY13 is $1.5 Bn. Housing credit is $7.4 Bn. If there is easy liquidity as commentators say where is all that money going? It has to flow into normal banking channels only right?

You know, as Ruchir Sharma says in his recent book Breakout Nations - I am not quoting, but to that effect - it's become cliched to speak in terms of country buckets - BRICS, EMs etc. Each of these countries in that bucket are unique and no worthy trade idea is ever going to emerge by just lumping together everything in your analysis. These acronyms mislead investors and new acronyms replace old ones simply because old ones didn't work.

Thanks again for responding.
M Ashok