Assertion (A): Money raised through small savings schemes is a part of the net borrowing at home that finances the fiscal deficit.
Reason (R): Net borrowing at home includes borrowing directly from the public through debt instruments.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Both (A) and (R) are true and (R) is the correct explanation of (A).
Assertion (A): Money raised through small savings schemes is a part of the net borrowing at home that finances the fiscal deficit. — True. Small savings schemes are a way the government borrows from people at home.
Reason (R): Net borrowing at home includes borrowing directly from the public through debt instruments. — True. The other home source is indirect borrowing from banks through SLR.
Why R explains A?
Small savings schemes are debt instruments sold directly to the public. R says such borrowing is part of net borrowing at home, so it tells why the money from these schemes counts there.
NCERT (2026-27): “5.2.1 Measures of Government Deficit … Net borrowing at home includes that directly borrowed from the public through debt instruments (for example, the various small savings schemes) and indirectly from commercial banks through Statutory Liquidity Ratio (SLR). …” |