This report deals with the basic understanding of Public debt, what it comprises of and how it is managed and why does the government resort to public borrowing. Various forms of public debt have been discussed to facilitate better understanding of the concept. We have also attempted to analyze the impact of certain macro economic variables on the public debt in our country. For this purpose, we have used the “SPSS 13.0 for windows” as a tool to carry out the regression analysis.
Public debt in india
1.1To identify what is public debt and why governments opt for public debt 1.2To understand the classification of public debt
1.3To understand the economic implications of public debt
To develop a regression model and analyse the impact of certain macro economic factors on public debt 2.BACKGROUND
We already know that the problem of resource mobilization is causing a concern in present times in achieving a self-reliant economy. The government finances its expenditure through conventional sources like taxes, public borrowing or printing money. With the government Undertaking programs of planned economic development on a large scale, it is not possible to meet the related expenditure either entirely through taxation or creation of new money. There is a certain limit beyond which revenue from taxation cannot be generated as it would affect the level of investment, production in the country and people’s paying capacity. Also financing the programs thru creation of new money beyond a certain level becomes inflationary. Hence, resorting to public borrowing as a method of resource mobilization has become an increasing phenomenon in recent times. Public borrowing helps in discouraging unproductive expenditure and diverts the savings of the people for capital formation, financing new...