Distinguish between Internal debt and External debt.
Q.2 (B) (iv) Distinguish between Internal debt and External debt.
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Answer: Distinguish between Internal debt and External debt
| Points | Internal debt | External debt |
|---|---|---|
| Meaning | Loans raised by the government from within the country. | Loans raised by the government from foreign countries and international institutions. |
| Sources | Individuals, banks, RBI, insurance companies, business firms. | Foreign governments, IMF, World Bank, ADB, etc. |
| Currency | Raised and repaid in domestic currency. | Usually repaid in foreign currency. |
| Effect on resources | Only transfers purchasing power within the country. | Brings additional resources into the country; repayment causes outflow of resources. |
| Burden | No direct burden on the economy as a whole. | Imposes a direct real burden on the country. |
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· 28 Oct 2026
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