In the context of the India 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:

The correct answer is B, that is, statements 1 and 2 only.

• Statement 1 is correct. Housing loans owed by households are part of household non-financial debt. Households borrow to buy assets and consume, and these loans are tracked in the RBI's household sector debt figures.
• Statement 2 is correct. Credit card balances are unsecured consumer borrowing by households, so they count as household debt.
• Statement 3 is wrong. Treasury bills are short-term money market instruments issued by the government to raise funds. They are traded in the financial market and held as financial assets by banks, institutions and investors. They are classed with financial instruments rather than with the non-financial debt concept used in RBI and Economic Survey discussions.

The core concept is the sectoral classification of debt in the Financial Stability Report and Economic Survey, which separates household and corporate borrowing from financial market instruments. This ties to Economy topics on financial inclusion, household indebtedness and financial stability, which often come up in Mains.

Trap: Aspirants see "government borrowing" and assume every government liability is non-financial debt. Check whether the instrument is a financial market security or a loan from the household and non-financial sector.