ICSE Class 10 Answered

Role of public debt in a nation:

1. To meet the budgetary deficit: Public debt is raised to bridge the gap between public expenditure and the tax revenues of the government. In case the government revenue from taxes and other sources is insufficient to meet the public expenditure, then the government borrows money.
2. To finance the development plans: The government has to finance developmental projects. In India, the government has to play a significant role for the development plans of the economy. Hence, the government borrows from the public to maintain the required funds.
3. To build infrastructure: In a developing country like India, the basic infrastructure facilities are very important for the process of development. These investment plans are less attractive to private companies as their returns are minimal. Hence, the government has to borrow money to invest in these projects.