1. Market borrowing
2. Treasury bills
3. Special securities issued to RBI
Which of these is/are components(s) of internal debt?
Explanation
Internal debt refers to the funds borrowed by the government from domestic sources rather than foreign loans. It includes various instruments used to raise funds within the country. Internal borrowing refers to the process by which the government borrows funds from domestic sources within its own country to finance its expenditures without resorting to foreign loans. This can be done through various mechanisms such as Market Borrowing, Treasury Bills, and Special Securities issued to the RBI. It reduces dependency on foreign loans, avoiding risks related to exchange rate fluctuations. Helps maintain economic sovereignty and control over debt.
Option (d) is correct:
The government issues bonds or securities to borrow from the domestic market. This is a major source of funding for government expenditures. It helps avoid reliance on foreign debt and minimizes risks associated with exchange rate fluctuations. Short-term borrowing instruments issued by the government, generally with a maturity of up to one year(Treasury bills). Used for managing short-term liquidity needs. The government issues special securities to the Reserve Bank of India (RBI) for various fiscal purposes. These help the government raise funds without affecting the open market borrowing program.