Question
Define public debt. Mention four types of Public Debt
✓
Answer
Public debt means loans raised by the government within or outside the country.
Four types of Public Debt :
(1) Productive Debts : Productive debts are those debts which are used by the government for those projects which yield income e.g. loans used for the construction of power projects.
(2) Unproductive Debts : Public debts taken for unproductive purpose, for example loans taken by the government to finance budget deficit or war are unproductive debts.
(3) Redeemable Debts : Debts which are repayable by the government after a fixed period of time are called redeemable debts. Interest on such loan is paid regularly.
(4) Irredeemable Debts : Irredeemable debts refer to those debts whose principal amount is not refunded by the government. Only interest is paid regularly on such loans.
Four types of Public Debt :
(1) Productive Debts : Productive debts are those debts which are used by the government for those projects which yield income e.g. loans used for the construction of power projects.
(2) Unproductive Debts : Public debts taken for unproductive purpose, for example loans taken by the government to finance budget deficit or war are unproductive debts.
(3) Redeemable Debts : Debts which are repayable by the government after a fixed period of time are called redeemable debts. Interest on such loan is paid regularly.
(4) Irredeemable Debts : Irredeemable debts refer to those debts whose principal amount is not refunded by the government. Only interest is paid regularly on such loans.
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