Productive and unproductive debt
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Productive and unproductive debt:
A debt is called productive if the loan is financed for projects which bring revenue to the government; for example, irrigation and power projects. ... A debt is called unproductive if the loan is financed for war and other relief operations in case of emergencies.
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The productive debt is expected to create assets which will yield income sufficient to pay the principle and interest on the loan. And unproductive means loans raise for war or protection against natural disaster do not create any asset.
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