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Does public debt impose a burden. Explain. |
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Answer» Public debt is not always a blessing. Excessive use of it creates a lot of crisis in the economy such as, (i) Hampers economic development of the country: Loans are easily borrowed but it is very difficult to repay them. Government imposes more taxes which brings instability and it is an obstacle in the economic development in the country. (ii) Poses threat to political freedom: Foreign loans and assistance lead to deep conflict among countries. The friction among countries challenges the political freedom. (iii) Proves a burden on common man: Loans taken for unproductive purposes are a burden on common man in the form of higher taxes. (iv) Leads to extravagant spending: Public debt leads to unplanned spending. This provides incentive to the government to implement the schemes that requires excessive expenditure. (v) Results in drain of national wealth: Repayment of foreign loans results in drain of wealth out of the country |
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