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What is the inflationary effect of public debt on the Indian economy?

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

A major part of the funded debt loans are held by the Reserve Bank of India. It enables them to issue additional quantity of money to the public to meet its growing demand for the development of an economy. The government takes short-term loans by issuing treasury bills which are held by the RBI. These treasury bills indicate deficit financing by the government. Hence, public debt has an inflationary effect on the economy.

Answered by Expert 24th April 2015, 9:39 AM
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