Public debt refers to the borrowing of the government from within the country or from abroad, from private individuals or from association of individuals or from banking or non-banking financial institution. Government borrows money in order to finance the expenditures. The need for public debt arises when there is budget deficit i.e. when expenditure of the government gets bigger than government income. Government just acting as debtor discharge the amount and pays the interest rate agreed on loan. In the world developing countries are taking loans for buying technology and especially for industrialization. The amount borrowed is invested in viable projects so that it fulfills the goals of the government and justifies the finance cost
Public debt refers to the borrowing of the government from within the country or from abroad, from private individuals or from association of individuals or from banking or non-banking financial institution. Government borrows money in order to finance the expenditures. The need for public debt arises when there is budget deficit i.e. when expenditure of the government gets bigger than government income. Government just acting as debtor discharge the amount and pays the interest rate agreed on loan. In the world developing countries are taking loans for buying technology and especially for industrialization. The amount borrowed is invested in viable projects so that it fulfills the goals of the government and justifies the finance cost
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