1-Income and Revenue: The Target of Public Debt Normally Is To Cover The Ditch That Developed in Any Year Between Proposed

Introduction
Public debt is a source of collecting income by state. Public or local debt is the debt the state collects from the citizens of other
countries.
Government can take debt from banks, business or organizations, business houses and the person.
Government can take debt from inside the country and from outside the country, or from both the sides.
Public debt normally is in the form of bonds (or if debt is for short time, then in the form of fiscal letter). In these bonds
government process that he will not only pay back the money on fix time, but also give installments on a regular gaps on
complete fix rate or in last in the form of a fix amount he will pay interest also. Debt is the last way of income for government.
Comparison between Private and Public Debt

There are many similarities and dissimilarities between private or ( non government debt) and government debt. Private person
and business home use this debt money to get some resources. So, private debt transfers the money from one use to another use.
By this, the meaning of public debt is those productive uses who are liked by no government area, sacrifice for those uses, which
the government likes. By this government and non government debt, are both normally transferred for money from one use to
another. The difference between public and private debt are following -
1. For government, there are internal and external both the sources are available but for persons these type of sources are not
available.
2. The use of debts taken by the government is for the complete society but the money got from private debts are used only for
gain of debt taken person.
3. As state has a good position, so as comparison to private debt, the rate of interest is law in government debts. Normally, it
happens that some corporation got debt on simple rates like government.
4. Government can force people to give debt but a person can not.
5. Government takes debts normally for production works but a person can take debt for consumption.
6. Personal debts are returned by public income, in which public industries income is also included. But a person pays debts from
his personal income. So, by public debt, the nature of pressure is different from the nature of private debt’s pressure.
7. In the last government can borrow debt in a form of policy, whether he needs money or not.
It can be possible that debt helps to bring stability in economic life. In the days of depression, it reduces the quantity of work
power in the hands of people, it helps to bring the rates down.
In the days of depression, government is able to do some types of expenditure by debts; it helps to bring the level high for
employment and business actions.
Objectives of Public Debt

1-Income and Revenue: The target of public debt normally is to cover the ditch that developed in any year between proposed
expenditure and expected revenue. Whenever because unexpected problem government's income becomes less because they have
to spend it to covers these problems then government cover it by taking debts.
2. In Times of Depression: Depression is the condition when costs reduce, there is a lack of courage in people for spending
money on industries and in future there is no possibility of getting gain. This condition can be removed when there is increase in
the demand of things and services and that is possible when in the country there is an increase in the expenditure of public
construction work or most important public use and infra-structure services. But, the increase in government expenditure is only
possible when there is increase in government income and increase in public income is not possible by taxation because it affects
unfavourably the incentive to do work and to invest that reduce the effective demand. So, there is only one way to take debt for
the government. Governments mainly take debt from banks so that they can get money for investment and could increase the
income or employment and as its result effective demand could also be increased. By this, the reduced cost can be stopped and
government is able to bring process and to develop it at the time of economic depression.
3. To Curb Inflation: Inflation is the name of that condition at the time of increased cost. So, government by taking debt can
take back a big quantity of work power from the hands of people but modern economists believe that as comparison to
government tax, taxation is said to be more important will to remove inflation, because if the debted government money is never
used in productive use, it increase the responsibility for government to give it back. But waste tax - income can easily to be
debitted in the government fund so the pressure can be removed from production in economy.
4. To Finance Development Plans: In undeveloped economy, there is always a lack. In these countries,
as the ability to pay the bill is less. So, government can not take shelter on heavy taxation. But to
remove poverty from the country, this is also most needed and important to do arrangements of
development plans. In this condition, the only way is to take public debt. So, the governments of
undeveloped countries take debts from within the country or from foreign governments or from
people to do finance arrangements.
5. The Finance Public Enterprises: Government also takes debts for the arrangement of finance for
the commercial enterprises running by itself.
6. Expansion of Education and Health Services: Government can also take debt for the construction and
development of education and health services and other services like this. That helps to increase normal
social welfare but does not give any direct finance and that is not productive from the angle of currency.
7. To Finance War: Government can take debt for the self defence work.
8. For the Establishment of Social Society: For the establishment of socialist society, government is
doing nationalism of industry and business in present time and running it themselves, but to run modern
industries, there is a need of big quantity of money government can only fulfill this by taking debts.
9. To Cover the Expenditure on Administrative Work Till Getting Income: The income which
government got from taxes that is available at the end of the year but expenditure is from the starting
of the year so at the beginning of the year government spends money by taking debt and pays the
debts when it got the income in the last of the year.
10. To Make the Public Verdict Favourable: When the citizens are not able to pay the tax then the
government have to take debt. Some times even then the more capability of public, the government
never increase taxes because the public verdict sticks to favourable.
Classification of Public Debt

Economists have divided debt on the bases of use, target, time limit and terms of payment. The different types of public debt are
following –
1. Internal and External Debt

Internal debts are those public debts taken from the country inside, but the external debt is a debt taken from foreign
governments. Foreign people and international organizations,
By the payment of interest on foreign debt, there is a reduction in net income of debtor country because their income’s big part
goes to the foreign country, but it doesn’t effect at the time of paying interest on internal debts. Whether the interest
on internal debts leave on tax payers or taken from them and paid as a form of interest on war
debts, it does not effect the national income of the country,
2. Productive and Unproductive Debt

This classification depends upon on the use of public debt. Debts can be used for the production
works and unproductive debt. Productive debts are those debts which are used in those plans which
provide income, like railway, plans of electricity and the plans of irrigation. The income got from these
plans can be used to the payment of yearly interest and for the payment of Principle. So, productive
or reproductive debts are those debts where are same costs or the assets of more cost kept. By this,
productive debt never put pressure on government and taxpayer.
On the other side, unproductive debts are those debts used in that plans, no income is provided, for
example, war. So, unproductive debts are those debts, no assets is in the back. The main reason of
unproductive debt is not only on war but at some point the losses of interest is also the reason.

1-Income and Revenue: The Target of Public Debt Normally Is To Cover The Ditch That Developed in Any Year Between Proposed

Uploaded by

Copyright:

Available Formats

1-Income and Revenue: The Target of Public Debt Normally Is To Cover The Ditch That Developed in Any Year Between Proposed

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

1-Income and Revenue: The Target of Public Debt Normally Is To Cover The Ditch That Developed in Any Year Between Proposed

Uploaded by

Copyright:

Available Formats

Introduction

Comparison between Private and Public Debt

Objectives of Public Debt

Classification of Public Debt

1. Internal and External Debt

2. Productive and Unproductive Debt

You might also like