With reference to the Indian economy, consider the following statements: 1. A share of the household…
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?
1 only
2 only
Both 1 and 2
Neither 1 nor 2
Solution
Households' financial savings (in deposits, small savings, PF, insurance, etc.) are channelled to government through banks and statutory liquidity instruments. Dated G-Secs auctioned by RBI form the largest component of internal/public debt.