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UPSC Prelims 2022 Paper-1 📅 05 Jun, 2022

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?

A
(a) 1 only
B
(b) 2 only
C
(c) Both 1 and 2
D
(d) Neither 1 nor 2
Result Summary
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UPSC Prelims
2022 • 05 Jun, 2022 • Paper-1
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?
Correct Answer
(c) Both 1 and 2
Statement 1 Analysis: Correct. Financial savings of households stored in commercial banks, provident funds, and small savings schemes are highly utilized by the......
Ref/Book : UPSC Prelims 2022
Ref. Subject Economy
Chapter -
Ref. Topic Public Finance
Pg. No -
💡 Analysis & Explanation
Statement 1 Analysis ▼
Correct. Financial savings of households stored in commercial banks, provident funds, and small savings schemes are highly utilized by the government to finance its fiscal deficit through the issuance of various debt instruments.
Statement 2 Analysis ▼
Correct. Internal debt predominantly consists of dated government securities (G-Secs) and treasury bills. Dated securities, sold via auctions at market-determined yields, constitute the overwhelming majority of this public debt.
Conclusion ▼
Both statements represent fundamental macroeconomic mechanisms of government finance in India.
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