Burden Transfer in Development Finance:

Although the mechanism of burden transfer may be used to spread the cost of public investment, it can not be used to spread the cost of a development programme, because the very objective of such a programme requires that total capital formation (public or private) be increased. But no gain is made toward achieving this objective if public capital formation is loan financed, where this  causes the an offsetting decline in the rate of private capital formation. Therefore the mechanism of burden transfer through internal loan finance is inapplicable in the very situation where it would be most appropriate.