A government requires money for its spending which includes normal government expenditures, capital expenditures on public works, relief expenditures, and subsidies of various types, transfer payments and social security benefits etc. Imposing tax on public for the above spending is major source of its revenue. Beside Taxation, government collects money through fiscal surplus of previous years, Seigniorage, through disinvestment of government’s stake in public sector units and public debts.
Public debts refers to money borrowed by the Government to cover the deficit between the government’s expenditures and its revenues which includes sovereign bonds (Gold Bonds),market loans, special bearer bonds, treasury bills, special loans and securities issued by the Reserve Bank of India. It also includes the outstanding external debt of the country.
However, public debts does not include government borrowings from the public in the form of small savings schemes such as National Savings Scheme, Kisan Vikas Patra, SCSS, Sukanya Samriddhi yojana, Public Provident Fund,and Post Office savings accounts and deposits.
