With reference to 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. UPSC GS Paper-I PYQs 300 Which of the above statements is/are correct?

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YESPYQ · Accepted Answer

Correct answer: Both 1 and 2. Statement 1 is correct : In India, people save through various financial options, including bank deposits, pension funds, insurance schemes, and government securities. Some of these savings are invested in government bonds and securities, help- ing the government fund its expenditures and manage its budget shortfall. Thus a portion of household financial savings is used to support government borrowing. Statement 2 is correct : The Indian government raises money by issuing dated securities, which are long-term bonds with a fixed maturity date. Their interest rates are decided by mar- ket demand and supply. The government sells these securities through auctions, where banks, financial institutions, and inves- tors place bids. These bonds make up a large part of the govern- ment’s internal debt, which is the money it owes to lenders with- in the country. The share of marketable securities in internal debt is at 76.4 per cent at end-March 2023 which is slightly moderate relative to 76.9 per cent at end-March 2022. The share of dated securities in public debt

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