Define public debt and give its components with reference to Indian government? Explain trends in public debt since 2010 onwards.

All liabilities of Central Government contracted against the Consolidated Fund of India is defined as Public Debt.

Components of Public Debt

Public debt is further classified into internal and external debt.

Internal debt is categorised into marketable and non-marketable debt. Marketable debt comprises of Government dated securities and Treasury Bills, issued through auctions. Non-marketable debt comprises –intermediate Treasury Bills (14-day ITBs) issued to State Governments/ UT of Puducherry and 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 Special Sec. against POLIF and compensation and other bonds.

External loans are not market loans. They have been raised from institutional creditors at concessional rates. Most of these external loans are fixed-rate loans, free from interest rate or currency volatility.

Trends in public debt since 2010

Trends in Public Debt
  • Total liabilities of the Central Government, as a ratio of GDP, have been consistently declining, particularly after the enactment of the FRBM Act, 2003. It was about near 50% in 2002-03, but it touched 40% by 2010-11 and it has been almost consistent since then.
  • Marketable Debt/GDP ratio increased since 2010-11 upto 2015-16. Later it started decreasing slightly.
  • Non-Marketable Debt/GDP ratio has been decreasing since 2010-11 (Except occasionally). But it has been kept under 10% since 2010-11 onwards.

Synopsis

KeywordsPublic Finance of AP: Revenue Deficit, Fiscal deficit and the debt
PaperAPPSC Group I 2020 Mains Paper IV : Economy and Development
Question2 (b). Define public debt and give its components with reference to Indian government? Explain trends in public debt since 2010 onwards.
SourceNCERT XII – Macroecomonics
Annual Public Debt Statement of GoI

Analysis

First part of the question is static. But trends in public debt can be gleaned only from Economic Survey or Annual Public Debt Statement of GoI. This is a dynamic part of the question.

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