BALANCE SHEET OF INDIA

The benefit of investing in companies with strong balance sheets isn't a secret. A company with a strong balance sheet brings along with it umpteen benefits. Benefits that, above everything else, let its owners sleep well at night. That being the case, if there's one entity in which your entire networth were to be invested, it's quite understandable if you would be on the edge of your seat to know the state of its balance sheet. Allow us to help.

The investment we're talking about is India. Yes, what happens to India's balance sheet is each one of our business. That's because most or all of our networth is invested in India. And the smallest red flag on that front can have a cascading effect on every single asset you own in the country.

Let's have a look at how this aspect of India stacks up against the rest of the world.

A Californian investment firm, Research Affiliates, recently came up with a study that contrasts the debt levels of countries around the world with their ability to pay. This in turn is based on the size and quality of each of their economies. Going by their findings, the US looks like one of the most stretched countries. Though it accounts for 14% of the world economy, it holds a huge 25% of global debt. Japan is even more startling; it carries 29% of all borrowings, while accounting for a miniscule 4% of world economy. Further, virtually all the nations of Western Europe carry debt that's 2 to 3 times their economic size, including the UK, France and Belgium.

What about India?

Measuring 8.6% of the world economy, it has less than 2% of its total debt. This makes it one of the best placed large economies in the world right now, next only to China. It is no wonder that investors from the world over sing only one song these days.