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:

QUESTION

Medium

Economy

Prelims 2020

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:

Select an option to attempt

Explanation

In an economy, there are two main sectors: financial and non-financial.

The financial sector consists of institutions like banks, insurance companies, and investment firms. The non-financial sector encompasses everything else, including households, businesses (except financial institutions), and the government.

Non-financial debt refers to the total amount of money owed by the non-financial sector. This includes loans, credit card balances, and other outstanding liabilities. It's a way to measure the overall indebtedness of households, businesses, and the government.

Understanding Non-Financial Debt Components

Household Debt: This includes various loans and credit obligations incurred by individual households.
Corporate Debt: This refers to the money owed by businesses (excluding financial institutions) to various creditors.
Government Debt: This represents the total amount of money borrowed by the government to finance its expenditures.

Therefore, all three options (1, 2, and 3) are considered non-financial debt in the Indian economy.

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