Answer :

Public debt or government debt is the amount that the Central Government owes. This may be in form of borrowings from bank, public financial institutions, or from other internal and external sources.

The public debt definitely imposes a burden on the economy which is being discussed below –


a) To repay the debt, the government imposes higher tax or get the money printed, which adversely affects the productivity and investment.


b) The burden of debt is transferred to future generation which negatively affects the welfare of younger generation.


c) The government increases the rate of interest on bonds and securities to attract more investment due to which a major part of saving of citizens goes in the hands of government, which lower the private investment.


d) The wealth of the country is drained out in repayment of loan taken from foreign countries and institutions.


Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
caricature
view all courses
RELATED QUESTIONS :

If real income toEconomics - Board Papers

What are capital Economics - Board Papers

What are revenue Economics - Board Papers