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What is public debt? Discuss the role of public debt in India. 

Asked by Topperlearning User 24th April 2015, 7:39 AM
Answered by Expert
Answer:

Public debt: When planned expenditure of the government exceeds its total revenue of, the Government needs to borrow money from individuals and organisations. This is called public debt. 

Role of public debt in a nation:

  1. To meet the budgetary deficit: The public debt is raised to bridge the gap between public expenditure and tax revenues of the government. If 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 an 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 infrastructural 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.
Answered by Expert 24th April 2015, 9:39 AM
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