Student | Posted on
National debt, often known as government debt or public debt, signifies the total financial obligation a government owes to external entities and its own citizens. It emerges when a government's expenditures exceed its revenue, prompting the need for borrowing to cover budgetary shortfalls or fund vital projects.
Governments employ various means to accumulate debt, such as issuing bonds, treasury bills, or securing loans from international bodies like the International Monetary Fund (IMF) or the World Bank. The causes of national debt can range from economic downturns to extensive public spending initiatives.
While some level of national debt can be manageable and even beneficial for financing infrastructure, education, or healthcare, excessive debt raises concerns. It leads to greater interest payments, potentially restricting the government's capacity to allocate funds for crucial public services.
Governments actively manage their national debt through fiscal policies aimed at minimizing deficits and implementing strategies for responsible debt repayment. National debt levels vary widely between countries and are subject to shifts influenced by economic conditions, governmental actions, and global events. Keeping debt at a sustainable level is vital for a nation's financial stability and overall economic health.
Also Read :- What is National Herald case? Why is it in news again?
0