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Question -

 Does public (government) debt impose a burden? Explain.



Answer -

Public debt is not always a blessing. Excessive use of it creates a lot of crisis in an economy; such as,

  1. Hampers Economic Development of a Country: Loans are easily borrowed but it is very difficult to repay them.Generally, government imposes more taxes. It brings instability and is an obstacle in the economic development of a country.
  2. Poses Threat to Political Freedom: Foreign loans and assistance lead to deep conflict among countries. The friction among countries challenges the political freedom.
  3. Proves a Burden on Common Man: Loans taken for unproductive purposes, like war and armaments, are a burden on common man in the form of higher taxes.
  4. Leads to Extravagant Spending: Public debt leads to unplanned spending. This provides incentive to the government to implement the schemes that require excessive expenditure.
  5. Results in Drain of National Wealth: Repayment of foreign loans results in drain of wealth out of the country.

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