- Public Debt does not include small savings, provident funds and other accounts, reserve funds and deposits.
Enrich Your Learning:
- In the Indian context, public debt includes the total liabilities of the Union government that have to be paid from the Consolidated Fund of India.
- Public debt is the total amount borrowed by the government of a country.
- Public debt, sometimes also referred to as government debt, represents the total outstanding debt (bonds and other securities) of a country’s central government.
- Public debt as a percentage of GDP is usually used as an indicator of the ability of a government to meet its future obligations.
- It is an important source of resources for a government to finance public spending and fill holes in the budget.
- Public debt can be split into internal (money borrowed within the country) and external (funds borrowed from non-Indian sources).
- However, it does not include small savings, provident funds and other accounts, reserve funds and deposits.
What are the types of Public Debt?
- The Union government broadly classifies its liabilities into two broad categories.
- The debt contracted against the Consolidated Fund of India is defined as public debt and includes all other funds received outside Consolidated Fund of India under Article 266 (2) of the Constitution, where the government merely acts as a banker or custodian.
- The second type of liabilities is called public account.
Sources of Public Debt:
- These are listed as follows:
- Dated government securities or G-secs
- Treasury Bills or T-bills
- External Assistance
- Short term borrowings
- Public Debt definition by Union Government
- The Union government describes those of its liabilities as public debt, which is contracted against the Consolidated Fund of India. This is as per Article 292 of the Constitution.
Public Debt versus Private Debt:
- Public Debt is the money owed by the Union government, while private debt comprises of all the loans raised by private companies, corporate sector and individuals such as home loans, auto loans, and personal loans.