Consider the following statements about the Government debt 1 Government debt is one ...........

Economic Affairs Tax System

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Consider the following statements about the Government debt.

1. Government debt is one method of financing government operations.

2. Government usually borrow by issuing securities, government bonds and bills.

3. Government debt is an indirect debt of the taxpayers.

Which of the above statements are correct?

Only 1 & 2Only

2 & 3

Only 1 & 3

All of the above

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Explanation:

Other than debt govt finances its operations by taxes, fee/fines etc. and earnings of PSUs
Government debt (also known as public interest, national debt and sovereign debt) is the debt owed by a central government. It is borrowed by issuing of securities like bonds, bills etc by RBI on behalf of govt.

And since it is to be repaid largely from taxpayers' money it is an indirect liability of taxpayers only