Is public debt burden?

The relevant factors are taken into account in considering public debts as a burden are given below:

1. Public debt transfers resources from the debtor to the creditor in the form of interest payments to the latter. The resource transferred from the taxpayers to the bondholders is measured in form of percentage term which appears small but it amounts huge in absolute term. For example, 10% of interest payout of an income of Rs. 20000/- is sufficient large amount of resources in absolute value.

3. If the burden of public debt consists in the raising of taxes for paying interest to the bondholders then the burden is accumulated on the general public in form of increased taxes.

4. When public debt is hold by a nation as a whole, it can not be analyzed in terms of absolute amount as the income of a country and its Government is limited. It is measured in ratio of total debt to total national income. If income is constant and debt is increasing, then ultimately it reduces government’s expenditure on public welfare or may lead the country to bankruptcy 

5. When unemployment is fought by deficit spending and as such the amount of public debt increases, the burden of the debt may appear to be much smaller and even nil or negative yet it is huge stock piled.

6.  A large amount of public debt requires a correspondingly large amount of tax collection and this may adversely affect work incentives and savings and risk-taking propensities, which under certain circumstances may mean a worse allocation of the economic resources.