On Private Sector:

All public expenditure increases the demand for goods, because it increases the purchasing power of the people and puts more money into circulation. When this expenditure is financed through taxation, current consumption is not reduced. If the government utilizes the borrowed money in purchasing goods and materials produced in private sector the demand for goods in the private sector may increase to the extent that the government spends borrowed funds for this purpose. Again, a portion of the borrowed funds may be utilized on salaries and wages of government officials, who may purchase the goods produced in the private sector. 

Hence the effect of expenditure of borrowed funds is that the demand for the products of industries in private sector increases, without adversely affecting the supply. Hence, the effects of public debt are said to be favourable.