Q. With reference to public debt, consider the following statements:
1.Austerity measures are followed to overcome the Sovereign Debt Crisis.
2.The Reserve Bank of India (RBI) is responsible for managing India’s public debt at national and state level.
Which of the statements given above is/are correct?
Answer: A
Notes:
Statement 1 is correct: Austerity measures refers to economic policies implemented by governments to reduce government spending in order to reduce public debt and shrink the budget deficit. Some of such measures include increasing taxes, reducing spending on government programs, reducing the salaries and wages of government employees, etc.
Statement 2 is incorrect: The Reserve Bank of India (RBI) is responsible for managing India’s public debt, especially debt denominated in the domestic currency. The debt of the state governments, on the other hand, is managed by the RBI under bilateral agreements.
Source: ForumIAS Blog
