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In India, deficit financing is used for raising resources for
[2013]
- a)Economic development
- b)Redemption of public debt
- c)Adjusting the balance of payments
- d)Reducing the foreign debt
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
In India, deficit financing is used for raising resources for[2013]a)E...
Deficit financing refers to the difference between expenditure and receipts. In public finance, it means the govt. is spending more than what it is earning. Deficit financing is a necessary evil in a welfare state as the states often fail to generate tax revenue which is sufficient enough to take care of the expenditure of the state. The basic intention behind deficit financing is to provide the necessary impetus to economic growth by artificial means.
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In India, deficit financing is used for raising resources for[2013]a)E...
Explanation:
Deficit Financing in India:
- Deficit financing is a method used by the government to raise funds when its expenditures exceed its revenues.
- In India, deficit financing is primarily used for economic development.
Economic Development:
- The main objective of deficit financing in India is to promote economic development.
- The government uses the funds raised through deficit financing for various development projects such as infrastructure development, poverty alleviation programs, and social welfare schemes.
Investment in Key Sectors:
- The resources raised through deficit financing are invested in key sectors of the economy to stimulate growth and development.
- This investment helps in creating employment opportunities, boosting industrial growth, and improving the standard of living of the people.
Infrastructure Development:
- Deficit financing is crucial for funding infrastructure projects such as roads, railways, ports, and power plants.
- These projects are essential for economic growth and development as they help in improving connectivity, reducing transportation costs, and enhancing productivity.
Overall Impact:
- By using deficit financing for economic development, the government aims to achieve sustainable and inclusive growth.
- It plays a vital role in bridging the investment gap, promoting industrialization, and reducing poverty in the country.
Therefore, in India, deficit financing is primarily used for raising resources for economic development to foster growth and improve the overall well-being of its citizens.
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