The Sovereign Dilemma
On July 20, Argentina moved towards an effective default after failing to reach an agreement with vulture funds demanding full payment of their $1.3 billion dues. This is its second brush with a sovereign debt crisis since 2001/02 when it too had been engulfed by what was then called the Latin American contagion, a direct result of huge foreign currency borrowings that the countries in the region had made in order to finance their deficits and huge infrastructure projects in last few decades of the 20th century.
A fear of a repeat might be playing on the minds of economists watching Finance Minister Nirmala Sitharaman's Budget speech on July 5 where she announced an intention of going for foreign currency borrowings in order to finance the government deficit that has ballooned over the years, mainly because of
