Question

In the context of the Indian economy, non-financial debt includes which of the following?

1. Housing loans owed by households

2. Amounts outstanding on credit cards

3. Treasury bills

Select the correct answer using the code given below:

1. 1 only
2. 1 and 2 only
3. 3 only
4. 1, 2 and 3

Answer 1

Correct Answer - Option 4 : 1, 2 and 3

The correct answer is 1 2 and 3.

• When an economy borrows money to be paid back at future date along with interest, it is known as Debt Financing.
• Debt Financing mainly includes two types of debts-
  • Public Debt-
    • It is the total amount borrowed by the government of a country.
    • It is further divided into two types-
      • Internal Public Debt
      • External Public Debt
• Non-Financial Debt-
  • ​It consists of credit instruments issued by government entities, households, and business which are not covered in the financial sector.

  • Housing loans owed by households,  Amounts outstanding on credit cards, Treasury bills, Credit Card balance etc. are types of nonfinancial debts. Hence 1 2 and 3 are correct.

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• Public Debt and Private Debt
  • ​The money owed by the union government comes under Public Debt.
  • All the loans, debts etc. raised by private companies, the corporate sector and individuals such as home loans, auto loans, personal loans come under Private Debt.