Q10.
With reference to the Indian economy, consider the following statements: 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. Which of the above statements is/are correct?
Answer
C
Explanation
Statement 1 is correct: Household financial savings (currency, bank deposits, mutual funds, insurance, small savings) partly go toward government borrowing through G-secs and Treasury Bills. Any adverse movement in household savings impacts key investors in government securities. Statement 2 is correct: Marketable internal debt comprises Government dated securities and Treasury Bills, issued through auctions. As of end-March 2021, dated securities stood at 71.7 lakh crore (36.3% of GDP) and accounted for 68.1% of total Public Debt.