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ICSE Class 10 Answered

Please give five points for this answer. Explain the importance of public debt.
Asked by aanya2205 | 01 Jan, 2019, 08:35: PM
answered-by-expert Expert Answer

Importance of public debt:

  • Public debt is raised to bridge the gap between public expenditure and tax revenues of the government. In case the government revenue from taxes and other sources is insufficient to meet public expenditure, then the government borrows money.
  • The government use the debt finance to obtain resources and to create human capital.
  • This debt helps the government to relieve from inflationary situations. They absorb excessive purchasing power from the lender.
  • The government finance developmental projects through public debt. In India, the government has to play a significant role for the development plans of the economy.
  • In a developing country like India, the basic infrastructure facilities are essential for the process of development. These investment plans are less attractive to private companies as their returns are minimal. So the public debt helps in providing finance for infrastructure facilities.
Answered by Tharageswari S | 02 Jan, 2019, 10:13: AM
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