Question

The primary difference between 'Public Debt' and 'Deficit Financing' is that public debt:

Q: Answer-The primary difference between 'Public Debt' and 'Deficit Financing' is that public debt:

Public Debt refers to the total outstanding borrowings of a government. It is a stock concept. This borrowing can be from the domestic public via bonds, from the central bank , or from foreign entities . Borrowing from the public non-bank is generally non-inflationary. Deficit Financing in a narrower, traditional sense refers specifically to covering a fiscal deficit by borrowing from the central bank RBI in India, which effectively leads to the printing of new money . This is often directly inflationary. Therefore, the key distinction is that public debt encompasses all borrowing, while deficit financing is a specific and potentially inflationary method of covering a deficit.