Topic Details (Notes format)

Public Finance and Government Debt

Subject: Economics

Book: Comprehensive Indian Economy

Public finance studies government revenue, expenditure, and debt management. The center and states raise funds via taxes, market borrowings, and external loans. Debt sustainability rests on prudent fiscal consolidation—if deficits are high over time, interest payments can crowd out development expenditure. Key metrics include debt-to-GDP ratio and interest coverage. The FRBM Act imposes rules to keep deficits within targets. In exam contexts, be ready to assess how large debt affects inflation, currency stability, and growth. Also highlight the role of zero-based budgeting or outcome budgeting to ensure efficient resource allocation.

Practice Questions

Which of the following is NOT a function of the World Trade Organization (WTO)?

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Which term refers to an economy that has elements of both capitalism and socialism?

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What is the meaning of “dumping” in international trade?

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What is meant by “credit rating”?

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What is meant by “monetary policy”?

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What is the term for the price at which demand and supply in a market are equal?

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What does the term “capital account” refer to in the balance of payments?

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Which of the following is NOT part of the World Bank Group?

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What is the main purpose of monetary policy?

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What is the purpose of the "Minimum Support Price" (MSP) in India?

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