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Question

Consider the following and state which of these is/are component(s) of internal debt?

                        I.        Market borrowing

                      II.        Treasury bills

                     III.        Special securities issued to RBI

                    IV.        ECB and NRI Deposits in India

A All except II Correct Answer Incorrect Answer
B All except I Correct Answer Incorrect Answer
C II only Correct Answer Incorrect Answer
D I, II, and III Correct Answer Incorrect Answer
E All except II Correct Answer Incorrect Answer

Solution

Internal debt is that part of the total debt that is owed to lenders within the country. It is the money the government borrows from its own citizens. The government borrows by issuing the Government Bonds and T-Bills (Treasury Bills). It also includes the Market borrowings by the government. External debt is owed to creditors outside the country. The outsider creditors can be foreign governments, International Financial Institutions such as World Bank, Asian Development Bank etc., corporate and foreign private households. External debt may be of several kinds such as multilateral, bilateral, IMF loans, Trade credits, NRI Deposits in India, External commercial borrowings etc.

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