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:
Answer & explanation
Answer: (d) 1, 2 and 3
Non-financial debt is the debt owed by the non-financial sectors of the economy: households, non-financial companies and the government. Housing loans and credit-card dues are household debt, and Treasury bills are short-term borrowing by the government, so all three count.
- ✓ 1. A housing loan is borrowing by a household. Households are part of the non-financial sector, which is split into non-financial corporations and households (BIS classification).
- ✓ 2. Money outstanding on a credit card is a loan to a household, so it is also household debt.
- ✓ 3. Treasury bills are short-term government securities (maturity under one year) issued by the Central Government; they are debt of the government sector, which is counted within the non-financial sector.
Remember · Non-financial debt = borrowings of households, non-financial companies and the government, i.e. everyone except banks and other financial institutions. Loans, credit-card dues and T-bills all count.
Sources
- Bank for International Settlements, Credit to the non-financial sector ↗ “total credit to the non-financial sector is broken down into credit to the government sector and the private non-financial sector, and the latter is further split between non-financial corporations and households (including non-profit institutions serving households).”
- Reserve Bank of India, Government Securities Market in India: A Primer ↗ “A Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government’s debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year)”
Question and answer: UPSC's official GS Paper I (2020, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·