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PUBLIC DEBT - Coggle Diagram
PUBLIC DEBT
Objectives
To bridge the budget deficit (Deficit Financing)
To fight against depression
To check inflation.
To finance economic development.
To meet unforeseen contingencies.
An alternate source of income when taxable capacity is reached.
To finance wars.
To finance public enterprises
To carry out welfare programmes.
To create infrastructure.
METHODS OF REPAYMENT OF DEBT
Repudiation
Refunding
Conversion of Loans
Sinking Fund
Capital levy:
Surplus budget
Buying up of Loans
Classification
Voluntary and compulsory
Funded and unfunded debt
Internal and external debt
Productive and Unproductive
Redeemable and Irredeemable loans
Short/Medium/Long term loans
Causes for Public Debt
the need to find out additional sources of finance
maintenance of law and order
protection of the country from external attack etc.
Important Sources
internal
external
Redemption of public debt
repayment of a loan and it is an important responsibility of the government.
Advantages
It saves the government from going in to bankruptcy.
It checks extravagance on the part of the governments.
It preserves the confidence of the lenders.
It makes easy for the government to float future loans.
It reduces the cost of management of public debt.
It saves the future generations from the pressure of public debt.
private investments and therefore a favorable climate for investment could be created
may act as a useful tool to curb deflation
Meaning & COncepts