UPSC CSE Prelims 2001

Correct Option

Internal debt refers to the portion of government debt that is raised from domestic sources within the country. It represents the government's borrowing from its own citizens, financial institutions, and the central bank. The components listed are integral parts of India's internal debt structure:

• Market borrowing: This involves the government issuing long-term bonds and other marketable securities in the domestic capital market. These are subscribed by commercial banks, financial institutions, insurance companies, and other investors.
• Treasury bills (T-bills): These are short-term money market instruments issued by the government to meet its temporary liquidity requirements. They are typically issued for maturities of 91, 182, or 364 days and are a crucial tool for managing government cash flow.
• Special securities issued to the RBI: The government issues special securities to the Reserve Bank of India for specific purposes, such as recapitalizing public sector banks, managing subsidies (e.g., oil bonds), or funding specific schemes. These are non-marketable and are held by the RBI.

Since all three items listed (market borrowing, treasury bills, and special securities issued to the RBI) are standard components of internal debt, option (D) is correct.

Incorrect Options

Options (A), (B), and (C) are incorrect because they exclude one or more valid components of internal debt. Internal debt comprehensively includes market borrowings, treasury bills, and special securities issued to the RBI. Therefore, any option that does not encompass all three components is incomplete and inaccurate in describing the full scope of internal debt.