Often the question comes in the minds of the people that when the Reserve Bank of India has a note printing machine, then why does the government not print as many notes as he wants, if the government distributes crores of rupees to everyone, then everyone will be rich, poverty will end, unemployment will not remain. As it looks good as it feels, the reality is completely different and dangerous. Actually, the easier it looks like printing the note, the more the economic work related to it is as many. Many countries have made this mistake and the results have been very dangerous, the economy has been ruined, the value of the note has become like soil, and people have become indebted to eat. In such a situation, let us tell you today that if notes are printed in India, then why does the government not become rich by printing more notes, as well as how this currency system works.

Why does the government not become rich by printing more notes?

The government definitely has the power to print notes, but this does not mean that it can print as much currency as he wishes. Rubbing money is not just the job of planting ink on a paper. A whole economic thinking and system works behind this. If the government gives Rs 1 crore to every poor, then the prices of things of the country will be uncontrollable. The reason for this is that money will increase but things will not increase. Money is just a piece of paper, but its value is because the government guarantees that money. He maintains balance in the country’s economy. If the government prints more money, then that balance deteriorates.

How does the currency system work?

The currency of a country runs on the basis of its GDP. If goods and services are being made in the country, then only the currency of that country is valued. The number of notes that the government usually printed is equal to 1-2 percent of the country’s GDP so that the balance of goods and money is maintained in the market. If more notes are printed, inflation increases, the value of currency falls, foreign companies stop investing, and the country’s sovereign rating falls. Sovereign ratings can consider a kind of credit score of a kind of country. The better it is, the more cheap debt to the country.

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Fdi in india: This news is going to be relaxed in terms of Indian economy, when for the first time in four years, foreign direct investment in the country has reached a record level. A few days ago, American agency S&P Global upgraded India’s rating. Along with this, the government has taken several important steps to boost the economy. Meanwhile, according to data released by RBI on Wednesday, the average FDI in the country has increased to $ 11.11 billion in the country for the first time in four years.

FDI record level

This is the highest ever since the average $ 12.32 billion FDI in July 2021. While the FDI was $ 9.57 billion in June a month ago, the FDI figure in July 2024 was $ 5.54 billion, which was almost half of this year’s July.

FDI comes from Singapore the most, followed by the Netherlands, Mauritius, US and UAE. About three fourths of the total FDI from these countries comes to India. Manufacturing and services sectors, including communications, computer and business services, are the most FDIs coming.

Importance of FDI

Significantly, FDI is an important indicator towards telling the health of the economy of any country and the restoration of foreign investors. Earlier, S&P had upgraded India’s rating from BBB to BBB on 14 August. A day later, PM Modi announced several economic reforms on August 15 to increase the pace of domestic economy. One of these announcements was the announcement of GST rates, which has been made effective on Monday earlier this week.

Even though there is a period of uncertainties in global trade, policy and financial markets during FY 2025-26, FDI figures are continuously increasing. Net FDI had increased to $ 10.75 billion during the first four months of the current financial year, which is three times more than the same period a year ago. At the same time, the average FDI has increased by 33 percent to 37.71 billion dollars. On the other hand, Indian companies’ direct investment abroad has increased by 44 percent to $ 10.67 billion.

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Us credit rating downgrade: The world’s largest economy has been seen for the first time in the history of America when its rating was cut by three major rating agencies, ie it was not given the top tier credit rating. Moody has reduced the American sovereign credit rating from triple one to ‘AA1’. The most interesting thing is that since the year 1919, Moody was being given the top rating to America. However, in 2023, he gave a negative outlook to America.

Similarly, S.EdP Global Rating removed the rating of triple ‘A’ from the US in 2011. Whereas Fitch rating also reduced America’s rating from August 2023 to ‘AA+’ from Triple ‘A’.

Rating due to increasing debt

Actually, the biggest reason for reducing the US rating from the credit rating agency is the increasing debt. Moody says that America’s debt has increased rapidly in the last decade. In the year 2024, America’s loan was more than about 35 trillion dollars, while its GDP is about 29 trillion dollars.

Moody estimates that the US government deficit i.e. Federal Deficit can come up to 9 percent of GDP by 2035. Last year it was 6.4 percent. In such a situation, the question is arising that after all, what can have some effect on India and other countries of the world to reduce America’s ratings from the rating agencies?

What effect?

Due to ratings by rating agency, the US government may have to pay more interest than before. Seeing the rating of a country or company, investors decide how much loan will be safe. Apart from this, foreign investors remain confident in the Indian market at this time. But if the trend of global investors changes, then there can be loss in its Indian market too. Overall, now America will have to reduce its debt and deficit to fix its rating.

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