Government borrowings in India are primarily financed by domestic savings, a significant portion of which comes from households, either directly or indirectly through financial intermediaries. Dated securities issued through market auctions are a major tool for the government to raise these funds and constitute a large part of its internal debt.
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?
Asked in UPSC IAS 2022 · Topic: Fiscal Policy & Revenue (Public Debt: Sources, types, debt sustainability, and management)
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