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Questions
With the help of an example explain the term productive debt.
What is meant by productive debt?
Explain the following:
Productive debt
Short/Brief Note
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Solution 1
A debt is called productive if the loan is financed for the projects which bring revenue to the government, such as irrigation and power projects. Unproductive public loans are a net burden on the community. The government will have to resort to additional taxation for their servicing and repayment.
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Solution 2
Loans taken by the government for developmental work are called productive debt. For example, loans are used for the construction of irrigation projects.
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