- Government of India needs money for multiple projects as:-
- Building infrastructure as roads, bridges etc.
- for implementation of social welfare programs and
- To cover budget deficits (when govt.’s expenses > govt’s revenue)
- Govt bonds are debt securities issued by the government to raise fund for a above purposes. By issuing such bonds, government is taking a loan from the investor for a specified period.
- The government pays them periodic interest payments (known as coupon payments) until the bond matures.
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