Question

What is meant by productive and unproductive debt?

Answer 1

PRODUCTIVE:-when the debt money is used to generate income greater than the servicing liabilities, its called productive debts.it involves raising money for productive purposes. the loan is used to add the productive capacity of a country's economy. 
UNPRODUCTIVE:- they r not added to the productive capacity of a country, they r usually loans used for wars, and famine relief.

Answer 2

Answer:Difference between productive and unproductive debt are as follows:

Explanation:

1. Productive Debt is the debt which is used by the government for directly productive purposes whereas unproductive debt is that debt which is used for undertaking projects which are not directly productive.

2. Productive debt is used for the projects which yields an income,like development of railways,power projects, irrigation projects, establishment of industries etc. On the other hand, unproductive debt is incurred on those projects which do not yield any income such as financing war, controlling floods,epidemics etc.

3.Productive debt adds to the total production capacity of the economy while Unproductive debt do not add to the productive capacity of the economy.