UPSC Prelims 2020 · Question 84 of 100
UPSC Prelims 2020 question on Non Financial Debt
- ExamUPSC CSE
- Year2020
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicPublic Finance
- DifficultyMedium
- TypeStatement
In the context of the Indian economy, non-financial debt includes which of the following?
1. Housing loans owed by households
2. Amounts outstanding on credit cards
3. Treasury bills
Select the correct answer using the code given below:
Show answer
Answer: D. 1, 2 and 3
Verdict
All three are correct → Option (d).
Analysis
Non-financial debt consists of credit instruments issued by governmental entities, households and businesses that are not included in the financial sector. (The financial sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities.)
Non-financial debt includes household or commercial loans, Treasury bills and credit card balances. They share most of the same characteristics with financial debt, except the issuers are non-financial.
Statement by statement
Statement 1 – CORRECT: Housing loans owed by households are non-financial debt (issued by households). Hence statement 1 is correct.
Statement 2 – CORRECT: Amounts outstanding on credit cards are non-financial debt (household credit card balances). Hence statement 2 is correct.
Statement 3 – CORRECT: Treasury bills are non-financial debt (issued by governmental entities, not financial sector entities). Hence statement 3 is correct.