Components of government borrowing and internal debt
Question
With reference to the Indian economy, consider the following statements: Which of the above statements is/are correct?
- 1.
A share of the household financial savings goes towards government borrowings.
- 2.
Dated securities issued at market-related rates in auctions form a large component of internal debt.
Options
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Explanation
Both statements are correct. A massive chunk of household financial savings (channeled via bank deposits, provident funds, and insurance companies) is statutorily invested in government securities to fund state borrowings. Furthermore, dated securities (long-term government bonds auctioned by the RBI) constitute the overwhelmingly largest component of India's internal public debt.
Answer: (c).
Question details
Year
2022
Paper
GS Paper 1
Question
Q10
Subject
Economy
Sub-topic
Fiscal Policy, Taxation & Budget
Type
Statement-based
Difficulty
Medium
Nature
Static
Source hint
Economic Survey 2021-22 / Public Debt Components
Same sub-topic — other years
Fiscal Policy, Taxation & Budget has appeared in multiple papers:
See all questions on Fiscal Policy, Taxation & Budget
Browse every tagged question across all years