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Research Article

EEO. 2021; 20(5): 5494-5499


GROWTH OF PUBLIC DEBT IN ECONOMIC DEVELOPMENT OF TAMILNADU

G. MURUGESWARI, Dr.S.THANGAMAYAN.




Abstract

Public debt as a means of financing economic development has come to assume a very important role in modern times. The extent to which the Government could mobilise resources for economic development through public debt depends largely on a skillful application of techniques of debt management. In recent years Governments expenditure is increasing faster than their ability to raise resources, because their activities are not so restricted as only to maintain law and order and protect the country against external aggression. It is widely recognised that for rapid and coordinated development of emerging economy, the State has to assume much broader obligations and to undertake responsibility for providing an extensive infrastructure through the development of Transport and Communications, Major and Medium Irrigation, Power etc,, and also to build up basic industries. The debt to GDP ratio has been rising in several States and therefore the concern has been expressed about the sustainability of the current fiscal policy. It is clear that it if public debt grows without a corresponding growth in revenue earning assets, the burden of interest payments on the budget would grow indefinitely if the debt-GDP ratio grows fast. Much of the Government borrowing has been under taken for investment, the economic or market value of such investment is far below the debt incurred because of either high cost of capital formation or poor maintenance or misdirection of investment.

Key words: Growth, Public Debt, Economic Development






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