India is considered to be in a virtual debt trap because India's external debt was a little just over $100 billion in 2004 but by March 2013 , this had grown to $390 billion. The reason India has accumulated such a huge short term debt stock is that cheap money at virtually zero interest rate was supplied in abundance by western central banks. Of course, the developed world followed an easy liquidity policy to save their own economies, threatened by the worst recession since the Great Depression. But many emerging market economies like India ended up walking into what can only be described as a "cheap money trap" or "virtual debt trap".