In the context of the Indian economy, non-financial debt includes which of the following?
- Housing loans owed by households
- Amounts outstanding on credit cards
- Treasury bills
Select the correct answer using the code given below:
- 1 only
- 1 and 2 only
- 3 only
- 1, 2 and 3
Explanation
Statement 1 is correct
- Non-Financial Debt refers to the total debt held by households, businesses, and governments, excluding the financial sector. It includes liabilities such as loans and borrowings that are not associated with financial institutions, such as banks and other financial service providers.
- Housing Loans Owed by Households: These are loans taken by individuals for purchasing or constructing houses. They form part of non-financial debt as they are personal liabilities not linked to financial institutions’ own debt.
Statement 2 is correct
- Amounts Outstanding on Credit Cards: Credit card debt is personal debt owed by households. It is considered non-financial debt because it represents borrowing by individuals from financial institutions, rather than borrowing by the financial institutions themselves.
Statement 3 is correct
- Treasury Bills: These are short-term government securities issued to finance public spending. Treasury bills represent government borrowing and are part of non-financial debt as they reflect the liabilities of the government sector.
