Question
Consider the following statements about Sinking Fund
Which of the statements given above is/are contact?
- It is a method of repayment of public debt.
- It is created by the government out of budgetary revenues every year.
Which of the statements given above is/are contact?
Answer: Option C
Answer: (c)
A sinking fund is a fund created by the government and gradually accumulated every year by setting aside a part of current public revenue in such a way that it would be sufficient to pay off the funded debt at the time of maturity.
Under this method, the aggregate burden of public debt is least felt, as the burden of taxing the people to repay the debt is spread evenly over the period of the accumulation of the fund. The preferable alternative for the government is to raise a new loan and credit the proceeds of the sinking fund. It is a separate fund established by a government.
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Answer: (c)
A sinking fund is a fund created by the government and gradually accumulated every year by setting aside a part of current public revenue in such a way that it would be sufficient to pay off the funded debt at the time of maturity.
Under this method, the aggregate burden of public debt is least felt, as the burden of taxing the people to repay the debt is spread evenly over the period of the accumulation of the fund. The preferable alternative for the government is to raise a new loan and credit the proceeds of the sinking fund. It is a separate fund established by a government.
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