UPSC Prelims 2022 · Question 10 of 98
UPSC Prelims 2022 question on Household Financial Savings
- ExamUPSC CSE
- Year2022
- PaperGeneral Studies Paper I
- SubjectIndian Economy
- TopicPublic Finance
- DifficultyMedium
- TypeStatement
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?
Show answer
Answer: C. Both 1 and 2
Verdict
Correct statements: Both 1 and 2 → Option (c).
Statement by statement
Statement 1 – CORRECT: Household financial savings refer to currency, bank deposits, debt securities, mutual funds, pension funds, insurance, and investments in small savings schemes by households. The government borrows from the market through government securities called G-secs and Treasury Bills. Hence a share of household financial savings goes towards government borrowings.
Statement 2 – CORRECT: The Central Government Debt includes all liabilities of Central Government contracted against the Consolidated Fund of India (defined as Public Debt). Marketable debt comprises of Government dated securities and Treasury Bills, issued through auctions. As at end-March 2021, outstanding amounts under dated securities stood at 71.7 lakh crore (36.3 per cent of GDP) and accounted for 68.1 per cent of total Public Debt. Hence dated securities form a large component of internal debt.