Question

how does a country meets its developmental needs

Answer 1

Development needs of a country are mostly met through taxes collected by the Government. In India,taxes are primarily of three broad categories, viz. direct, indirect and tax on manufacture or Central Excise or CENVAT. Income Tax is a direct tax levied on the income of a person; indirect taxes are levied on users or buyers of goods and services; Central Excise or CENVAT is a tax on manufacture and is levied on manufactured goods at the factory gate. Cess and toll tax are other the forms of collecting revenue for development; agricultural cess and toll tax  at the entry-point of bridges are quite well known. Royalty for mines or plantation sites leased by the Government too fetch revenue for development.

Development needs of a country are also met by the Government through the issuance of bonds. These are debt instruments with a certain lock-in period and the public invest in them, especially when the Government allows some tax incentives. On maturity or periodically, interest is paid on this borrowed capital; sometimes, the accrued interest is added on to the original bond value in growth schemes and the accumulated benefit passed on to the bondholder at the time of maturity.