Needs, Sources & repayment of Public debt, Public finance Video Lecture | Public Finance - B Com

the amount of public expenditure has
increased over the years because of the
increase in the activities of the
government related to the welfare and
the maintenance as a result the
government finds difficult to cope up
with the increasing expenditure as a
result the government needs to borrow
money from the public as well as from
the institution and this the concept
which is related to the chapter that is
public debt now we can say that the
public debt it is the loans which is
raised by the government from within the
country or outside the country and it
can be borrowed from individuals public
enterprises and the banks etc after this
we can look into the different types of
the public debt or the structure of the
public debt there can be the different
types of public debt like internal and
the external debt productive and
unproductive debt redeemable an
irredeemable debt funded and unfunded
debt short term and long term debt and
last but not the least that is
marketable and non-marketable it these
are the different types of public debt
now we are going to look into the
details we are going to look into the
details or the explanation of different
types of public debt first of all let's
start with the first that is the
internal and the external debt internal
debt is that which is borrowed from
within the country from within the
country like from the people those who
are living in the country and the
different institutions which are a part
and parcel of the country next thing
which comes over here as the external
debt external debt is that which is
stated from the institutions or from the
government of the foreign countries now
we can differentiate between these two
also the internal debt can be
compulsorily or the voluntarily depth
whereas the external debt is only a
voluntarily debt next category is your
productive debt productive debt is that
which is used by the government for a
directly productive purposes for example
for the construction of Railways for the
construction of power projects etc and
this is the debt which increases the
productive capacity of the country so as
a result these type the productive debt
is not
burden for the government as well for
the taxpayers next type of debt which is
there that is a non-productive debt a
non-productive debt is that which is not
used directly by the government for
productive purposes this type of debt
can be used for meeting the expenditures
during the wars during the floods or the
any natural calamities these type of
debts do not add to the productive
capacity of the country it means that
these debts do not help in increasing
the production or increasing the level
of the economy in any case in other
words we can say that the unproductive
debt is that which increases the burden
for the government and the taxpayers as
well as a result these type of debts are
also known as the deadweight debt
because these are only the burden for
the government next type of category
which comes over here as the redeemable
an irredeemable debt first is redeemable
debt redeemable is that is that in which
the government promises to pay off the
loan at some specific future date and
this the government gives this assurance
that the third loan will be repaid by
the government on the future date and in
this case the interest is paid regularly
interest is paid regularly but the
principal amount is paid after the
expiry of the date next category is the
redeemable debt redeemable debt is that
in which the principal amount is never
returned by the government but the
interest is paid regularly by the
government but this type of debt is
rarely found in any of the economy next
category which comes over here as the
funded debt and the unfunded debt funded
it is that in which the government
establishes a separate fund to pay off
the amount of loan not as principal as
well as the interest in this every year
the government deposits a specific
amount of money to the fund and on the
maturity of the debt is repaid by the
government from that specific amount and
the funds are generally created by the
government for the long term dates long
term let's say for the more than five
years next category which comes over
here is the unfunded date
unfunded debts are those for which the
government generally do not create any
separate fund and these debts are only
for the short period of a time next type
of debt which is there is a voluntary
debt and the compulsory late voluntary
debt are those debts which are raised
from the public without any element of
compulsion or question these are the
debts in which the people they give it
to the government willingly on their own
without any separation without any force
from the side of the government
on the other side we have a compulsory
debts compulsory debt are taken by the
government against the wishes of the
people against the wishes of the people
it means that these are the debts which
are raised by the government forcefully
by suppressing the people or in other
words we can say by compelling the
people to give the loans to the
government but this type of debt is very
unpopular and literally used by the
government in the prison term because
this is the debt which spoils the image
of the government because it is
completely unjust and unfair
next type of debt we have is the short
term debt short term debt is that which
is raised by the government for the
period of 3 to 9 months for example we
have pressure e bills next is the long
term debts long term debts is that which
is repayable by the government after a
long period say 5 years or more but one
advantage over here is this that in the
long term debts or the long term loans
the rate of interest is very high which
is paid by the government next category
which comes over here as the marketable
are non-marketable debt marketable debts
are those for which the instruments can
be sold in the stock market whereas the
non-marketable debts are those for which
the instruments cannot be sold in the
market after looking into the various
types of the debts
let's revise the types of debts first we
have the first one category is the
external and the internal debt second is
the funded and unfunded debt third is
redeemable an irredeemable debt fourth
is the short term and long term debt and
last but not the least we have more
our non-marketable date now after
looking into the types of the public
debt we can look into the different
reasons what are the different reasons
for generating or for borrowing by the
government
the first reason we have to meet the
budgetary deficit sometimes the
government finds difficult to cope up
with the extra expenditure of the
government in the current year and if
the government government needs to cope
up the a current expenditure with the
current revenue the government needs to
borrow and whenever the government needs
to borrow it is generally only for the
short term let's look into the reasons
for borrowing there can be the different
reasons to borrow from the public by the
government the first reason is to meet
the budgetary deficit the government
borrows to meet its current revenue
expenditure if the income from various
sources fall short of current
expenditure the government borrows for
the short term and it is generally done
by the countries which are
underdeveloped or the developing
countries of the world second thing
which comes over here as we all are
aware that in the modern times the wars
are becoming very expensive due to the
excess expenditure on the arms and
ammunition as well as on the development
of the various equipments which are
required during the world as a result
the expenditure of the war cannot be met
by the government without the borrowing
because the taxation cannot be increased
up to certain limit as a result the
government always finds public borrowing
as the easier way to meet the
expenditure of the war to provide
foreign exchange like in the case of the
underdeveloped countries the
underdeveloped countries need the
various or the huge amount of capital to
purchase the capital equipments and the
raw materials and to cover the deficit
in the balance of payments the next
reason which comes over here is the
government also needs to next the
developed countries not only the
developing countries of the world but
the developed countries they also borrow
from the public from within the country
as well as from the outside the country
like the developed countries they borrow
to control recession which occurs due
to a fall in private consumption and the
investment expenditure in this case the
government borrows from the various
sources so that it can encourage the
private investors encourage the private
consumers to purchase or to consume more
as I do I decide to encourage the
investors to invest more into the
various projects so that the government
or the economy can come out of the
recession next thing which comes over
here the government also need tomorrow
during to meet the unforeseen
emergencies or the natural calamities
like flood or earthquake etc not let's
recap so late the different reasons for
which we borrow or which the government
borrow from the public through various
sources the first one is to meet the
budgetary deficit whenever the
government is in problem Oris finds
difficult to cope up at the expenditure
and the revenue of the government the
government borrows from the various
sources second the government also
borrows money from the public to meet
the expenditures of the wall because the
walls are very expensive nowadays next
thing the government also borrows from
the public to meet the unforeseen
emergencies to check the recession after
looking into the various reasons for the
public debt now let's look into the what
are the different