Q. Which one of the following is not an effect of high public debt ratio?
A high public debt ratio has three main implications for macro-economic policy over the medium term. First, the interest costs of servicing this public debt leave the government with less money to spend on essential items such as infrastructure, the green transition, welfare programmes, defence and social security. Second, the government’s ability to respond to the next shock is restricted when the public debt ratio is already high. Third, the Reserve Bank of India’s ability to conduct an independent monetary policy to control inflation is compromised when it also has to worry about managing a mountain of public debt on behalf of the government. T