- A. 1 only
- B. 2 only
- C. Both l and 2
- D. Neither 1 nor 2
Answer: C
Explanation
Household financial savings refer to currency, bank deposits, debt securities, mutual funds, pension funds, insurance, and investments in small savings schemes by households. The net household financial savings was 11.5 percent of GNDI (gross national disposal income) in 2020-21. A part of this financial saving goes toward government borrowing. As government borrows through the issue of government securities called G-secs and Treasury Bills. It borrows from the market, small savings funds, state provident funds, external assistance and short-term borrowings. Any adverse movement in the household savings will have a significant bearing on banks, insurance companies and mutual/provident funds, who, in turn, are key investors in government securities. Hence statement 1 is correct. The Central Government Debt includes all liabilities of Central Government contracted against the Consolidated Fund of India (defined as Public Debt). Public debt is further classified into internal and external debt. Internal debt consists of marketable debt and non-marketable debt. Marketable debt comprises of Government dated securities and Treasury Bills, issued through auctions. Non-marketable debt comprises of intermediate Treasury Bills (14 days ITBs) issued to State Governments/UTs as well as select Central Banks, special securities issued against small savings, special securities issued to public sector banks/EXIM Bank, securities issued to international financial institutions, and compensation and other bonds. All marketable securities i.e. Dated securities and Treasury bills are issued through auctions as per the schedule notified through halfyearly/quarterly auction calendars. 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 the total Public Debt. Hence statement 2 is correct.