explain the reasons for raising public debts
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Answer:
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Explanation:
(i) The most important cause of increase in public debt is war of war-preparedness. Nations attach a great importance to their territorial integrity and they consider no sacrifice too much to defend their country. Every war, therefore, leaves the country under greater debt.
(ii) The increase is also due to fairly frequent budget deficits or current account. The deficits arise from the necessity of maintaining full economic activity in the economies which may have ceased to expand.
(iii) Increase in public debt is also due to the undertaking of welfare schemes by governments in modern times.
(iv) In Public utilities, where there is no convenient profit check, no right control over cost can be maintained and there are more losses than gains. They also add to the weight of public debt.
(v) In recent years, urge for economic growth has induced the underdeveloped countries to contract debts both internally and externally. The volume of public debt has consequently swollen.
Answer:
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