Difference between public borrowing and public debt
Answers
Explanation:
Borrowing is done on requirement. Whenever government whether central or state requires funds to meet its expenditure whether capital or revenue and/or for redemption of loan taken earlier resort to fresh market borrowings and done generally thru Reserve Bank of India. The rate of interest on such borrowing is decided by RBI depending upon quantum of loan, availability of liquidity, prevailing interest rate, tenure premium and rating of government for which it is raising such borrowing. These are generally a mixture of both short/ long dated.
Whereas debt instruments are open round the year, contribution to PPF, NSC, RDs, MIS falls under this category. The rate of interest are fixed for every quarter/half year/annual. These are on tap round the year. The subscription to these are at the desire and will of the subscriber. The tenure of these instruments are fixed.
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Explanation:
Public borrowing and debt.
Governments must borrow if their revenue is insufficient to pay for expenditure - a situation called a fiscal deficit. Borrowing, which can be short term or long term, involves the sale of government securities.