Presented to : Dr shiv

kumar

Presented by :loveleen kaur

roll no : 7216
 Publicdebt refer to loans incurred by the
government to finance its activities. Local ,
state & central government borrow money
to pay for large project such as new
government building schools , roads etc.
This debt can take the form of many types
of loans to the government . MOSTLY Public
debt raised internally or externally.
 INDIVIDUALS & PRIVATE ORGANISATION

 NON-BANKING FINANCIAL INSTITUTIONS.

 COMMERCIAL BANKS

 CENTRAL BANKS

 EXTERNAL
SOURCES-IMF, IBRD,IDA, IFC,
WORLD BANK.
 Productive and unproductive debts
 Voluntary and compulsory debts
 Internal and external debts
 Short term &long term debts.
 Redeemable and irredeemable debts
 Funded and unfunded debt
 productive debt refers to that loan which is
raised by the government for increasing the
productive power of the economy . such as
railways, development of mines and
industries, irrigation works, education, etc

 Unproductive debt is one which does not

add to the productive assets of a country.
When the government borrows for
unproductive purposes like financing a war.
 Voluntary debt. public borrowings are
voluntary in nature. When the government
floats a loan by issuing securities, members
of the public and institutions like
commercial banks may subscribe to them
 Compulsory debt. When government
borrows from people by using coercive
methods, loans so raised are referred to as
compulsory public debt or compulsory
loans.
 Internal debt. Internal debt refers to the
government loans floated in the capital
markets within the country. Such debt is
subscribed by individuals and institutions
of the country.
 External debt. if a public loan is floated
in the foreign capital markets, i.e., outside
the country, by the government from
foreign nationals, foreign governments,
international financial institutions, it is
called external debt.
 Short term debt. government borrows
money for such period from the central
bank of the country to cover temporary
deficits in the budget. Time period 3 to 8
month.
 Long term debt. For development
purposes, long period loans are raised
by the government usually for a period
exceeding five years or more.
 Redeemable public debt. Redeemable
public debt refers to that debt which the
government promises to pay off at some
future date. After the maturity period, the
government pays the amount to the
lenders.
 Irredeemable . government does not
make any promise about the payment of
the principal amount, although interest is
paid regularly to the lenders.
 Funded debt Funded debt is the loan
repayable after a long period of time,
usually more than a year. for the repayment
of such debt government maintains a
separate fund
 Unfunded debt. which are repayable within
a short period, usually less than a year. It is
unfunded because no separate fund is
maintained by the government for the debt
repayment. Since repayment of unfunded
debt is made out of public revenue.
Year Internal External Total
Debt Debt Public
Debt
1950-51 2,022 32 2,054
1960-61 3,978 761 4,739
1980-81 30,864 13,479 44,343
1990-91 2,83,033 31,525- 3,14,558
2000-01 8,03,697 65,945 8,69,642
2008-09 19,72,532 11,23,675 20,95,207
 The interest on public debt is too high.

 puts Burden on citizens of the country.

 Productive use of fund is not guaranteed.

 Leads to increase in tax.

 It will drag down the standard of living of

hard working people and retired people.
 Atthe we can conclude that public debt
is essential for the functioning of the
government & economy. Government
needs to introduce public debt
management policies.
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