Seeds of future crises being sowed!

The government fiscal deficit is expected at 10% levels of the GDP!

What does this mean for the future (once the sand has settled down)

The high deficits would mean higher interest rates and we would witness crowding out by private players. 

But what about the existing private players who already have a large number of future investments. 

Take the case of Reliance Power. With 3 UMPP's, it is expected to spend about 55000 crores in the next 5 to 7 years period. With no operational project, it will have to meet the requirements only by debt. (The IPO bogus issue cannot be supplemented by another bogus FPO). 

Taking the average interest levels then to be around 8-9% (or probably more), it is a matter of concern of how it would be in a profitable position. 

An example of this, now takes us to a graver problem. 

All the investments are usually in power sector, infrastructure projects or capital goods. Given the imperative role they play in the economy, the Government has to ensure that these do not go into a failure or they would be the source of the next recession