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

LohaHridoy

5 views

2025-01-04 04:42

1 Answers

AhmedNazir

Option 3 : Both 1 and 2

The correct answer is Both 1 and 2.

Household financial savings

It refers to currency, bank deposits, debt securities, mutual funds, pension funds, insurance, and investments in small savings schemes.
The total of these savings is referred to as gross household financial savings.
Once financial liabilities, including loans from banks, non-banking financial companies (NBFCs), and housing finance companies, are subtracted from gross savings, what remains is referred to as net household financial savings.
A share of household financial savings goes to government borrowings, as part of public accounts of India. It mainly consists of provident fund. Hence, Statement 1 is correct.

Dated Government Securities

It is government securities or bonds which are long-term, the tenor ranging from 5 years to 30 years.
These have a fixed or floating coupon (or interest rate) associated with them which are paid on the face value at fixed intervals.
The securities can be issued by both the centre and the state governments to mobilise funds.
The government issues these funds to finance a fiscal deficit.
Dated securities mean regular government bonds, whereas T-bills are considered separately.
Dated securities issued at market-related rates comprise a large share of internal debt. Hence, Statement 2 is correct.

5 views Answered 2022-09-04 04:29

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