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• The national MPI is calculated using the
household microdata collected at the unit-
level for the NFHS that is used to derive the
baseline multidimensional poverty.

• Further, the country’s progress ismeasured

using this baseline in the NFHS-5, for which

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the data was collected between 2019 and

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2020.

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• NFHS is conducted by the International
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Institute for Population Sciences (IIPS)

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under the Ministry of Health and Family

Welfare, Government of India.
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 States’ Efforts to Improve Revenue
• Kerala and Karnataka are aiming to reduce
disparities between property guidance values and
market values to increase tax collection from

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registration and stamp duties.

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• Himachal Pradesh’s Sadbhavna Yojana addresses

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pending cases under different tax Acts.

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• Maharashtra and Rajasthan are contemplating
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continuation of amnesty programs to resolve

pending cases, which in turn is expected to
unlock tax arrears receivables.
• States are also introducing cesses to generate
additional revenue.
– The examples are Kerala’s Social Security cess on
Indian Made Foreign Liquor (IMFL) and fuel sales,
– Goa’s Green cess on non-Goan vehicles, and

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– Himachal Pradesh’s water and milk cess.

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• Delhi will also set up a dedicated Tax Policy

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and Revenue Augmentation Unit which will

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use advanced technologies, including data
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analytics, to boost tax collections. In order to

augment nontax revenue
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• Public Debt denotes liabilities payable by the
Central Government, which are contracted
against the Consolidated Fund of India, as
provided under Article 292 of the Constitution
of India. It has been further classified under two
heads, i.e., Internal Debt and External Debt.

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• Internal debt of the Central Government

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consists of marketable securities and non-

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marketable securities

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– Marketable securities include

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• fixed tenor and fixed/floating rate dated securities,
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• Short-term borrowings through Treasury Bills and Cash

Management Bills.
• The non-marketable securities in internal debt are

– the special Central Government securities issued to National Small

Savings Fund (NSSF),

– securities issued to international financial institutions-

• These securities are issued to IMF, IBRD, IDA, ADB,African Development

Fund & Bank and International Fund for Agricultural Development.

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• These special securities are issued primarily towards India‟s

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subscriptions/contributions to these institutions and certain transactions

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involving use of Special Drawing Rights (SDRs).

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• These liabilities are non-interest bearing in nature

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– 14-day Intermediate Treasury Bills-issued to the State Governments
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(and select Foreign Central Banks) to enable them to deploy their

short-term surplus cash at a fixed interest rate. The surplus cash
balance of State Governments is automatically invested in these
instruments. From January 30, 2017 onwards, implicit yield payable
on 14-day ITBs has been linked to Reverse Repo rate announced by
RBI and has been set at Reverse Repo rate minus 200 basis points,
subject to an upper ceiling of 5.0 per cent.
– special securities issued against securitisation of
balances under postal insurance and annuity funds
(POLIF and RPOLIF)-Government issued Special Securities
to Directorate of Postal Life Insurance with a view to convert
part of the frozen corpus of Post Office Life Insurance Fund
(POLIF) and Rural Post Life Insurance Fund (RPOLIF) into
market-linked dated securities.

– compensation & other bonds (including outstanding

amounts under Sovereign Gold Bond Scheme and Gold

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Monetisation Scheme)

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• category includes various types of special purpose bonds such as

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Relief Bonds, Saving Bonds, bonds issued under Sovereign Gold

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Bond/Gold Monetisation Schemes by the Central Government, etc.

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• These bonds carry fixed rates of interest and are generally launched
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for retail subscription
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– special securities issued to public sector banks/ EXIM

Bank/IDBI Bank/IIFCL and
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• Public Account Liabilities-
– All public money received by or on behalf of the
Government of India, other than those for credit to the
Consolidated Fund of India, are credited to the Public
Account of India.
– The receipts into the Public Account and disbursements
out of it are generally not subjected to vote by the
Parliament.
– In the case of Public Account Liabilities, the

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Government acts as a Banker or Trustee and refunds

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the money on demand after completion of the implicit

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contract/event.

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• It includes-
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– NSSF- The gap between total liabilities and investments
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of NSSF is the net liability of the Central Government

towards NSSF in public account. The investment of
NSSF includes Special Securities issued to NSSF by
the Central Government, State Governments and
investments of NSSF in public agencies.
• State Provident Fund- The share of accumulated
Provident Fund contributions of Central
Government employees under the head ‘State
Provident Funds’.

• Other Accounts’ include sundry items such as

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special deposits of non-Government Provident

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Funds with the Central Government, securities

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issued in lieu of subsidies, other deposits and

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accounts, insurance and pension funds, postal life

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insurance, etc- fo
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– Certain payments made by the Central Government in
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lieu of subsidies were in the form of Special Securities

issued to Oil Marketing Companies, Fertilizers
Companies and Food Corporation of India.
• Extra budgetary resources liabilities are defined as
those financial liabilities of the Govt. that are raised by
public sector undertakings but which are fully
serviced, in respect of principal and interest, by the
Govt. of India through the Union Budget.

• General Government Debt represents the indebtedness

of the Government sector (Central, State Governments
and UTs with legislature).

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• This is arrived at by consolidating the liabilities of the

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Central Government, State Governments and UTs with

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legislature and netting out inter-governmental transactions

21
viz.,

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– (i) investment in T-Bills (14-day ITBs and Auction Treasury

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Bills (91/182/364-day T-Bills) by States/UTs with legislature
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which represents lending by States/UTs to the Centre; and
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– (ii) Centre‟s loans to States and UTs.

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 External Debt
• External debt as a ratio of GDP fell to 18.9 per
cent as at end-March 2023 from 20.0 per cent

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a year ago (Figure 1.4). It has been around 20

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per cent in recent years.

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• Sovereign debt includes

• (i) external debt outstanding on account of loans

received by Government of India under the
‘external assistance’ programme, and civilian
component of Rupee Debt;

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• (ii) other Government debt comprising borrowings

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from IMF, defence debt component of Rupee debt

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as well as foreign currency defence debt and FII

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investment in Government Securities.
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• Non- sovereign includes the remaining

components of external debt.
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: COVID-19 and Debt Relief from
Multilateral Agencies
• To cope with the emerging situation, the IMF and the
World Bank urged the Saudi Arabia G20 Presidency to
set up the Debt Service Suspension Initiative (DSSI)
which was established in May 2020. The purpose of this
window was to ensure that bilateral official creditors

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temporarily suspend debt service payments from the

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most vulnerable countries, subject to requests being

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made by the debtors, until the end of 2020.

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• The potential beneficiaries under DSSI were the 73 low-
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income countries eligible for support under the IMF’s
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Poverty Reduction and Growth Facility (PRGF), which

supports the world’s poorest countries. The private
creditors were also invited to participate in the
initiative on comparable terms.
• The Common Framework for Debt Treatment
beyond the DSSI was endorsed by the G20 Finance
Ministers and Central Bank Governors (FMCBGs)
during the G20 Saudi Arabian Presidency in
November 2020.

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• The Common Framework was also endorsed by the

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Paris Club. This Framework sought to address debt

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vulnerabilities to facilitate timely and orderly debt

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treatment for DSSI-eligible countries, with broad
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creditors’ participation, including the private sector

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on a case-by-case basis.
• The Catastrophe Containment and Relief Trust (CCRT)
provides grants for debt relief for the low-income and
most vulnerable countries hit by catastrophic natural
disasters or public health disasters.

• CCRT assistance is available to countries if they are

eligible to borrow from the IMF’s Poverty Reduction

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and Growth Trust (PRGT) and their per capita income is

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less than the International Development Association’s

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(IDA) operational cut-off level.

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• Countries qualify for relief if a natural disaster has
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directly affected at least one-third of the population,

is estimated to have destroyed more than a quarter of
the country’s productive capacity or has caused
damage deemed to exceed 100 per cent of GDP
• The IMF’s emergency financing through Rapid Credit
Facility (RCF) and Rapid Financing Instrument (RFI) is a new
borrowing opportunity from the IMF. T

• The RCF provides fast concessional financial assistance to

LICs facing an urgent balance of payments need.

• Similarly, the RFI is one of the facilities under the General

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Resources Account (GRA) that provides financial support to

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countries, including in times of crisis.

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• In September 2022, the IMF established a new temporary

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food shock window (FSW) under RFI/RCF to provide, for a
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period of one year, a new channel for emergency Fund
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financing to member countries that have an urgent balance

of payment need due to acute food insecurity, a sharp
increase in their food import bill, or a shock to their cereal
exports.
• In 2020, many developing and low-income countries
could not pay for healthcare and vaccines or invest in
their recovery and became indebted. At that point, a
new SDR allocation was implemented to overcome
the liquidity crisis and support vulnerable people.

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• FACTS-SDR

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• SDRs are reserve assets but not foreign aid. Therefore,

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an SDR allocation does not add to any country’s public

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debt burden. However, it is shown as part of gross
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external debt for the purpose of accounting.
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• SDRs allocation supplements foreign exchange reserves

• Starting from August 1, 2022, the value of SDR is based on a
weighted average of the world’s five major currencies as follows:
• US Dollar (43.38 per cent)
• Euro (29.31 per cent),
• Chinese Yuan (12.28 per cent),
• Japanese Yen (7.59 per cent), and
• Pound Sterling (7.44 per cent).
• In addition to the participating members, there are 20
organizations approved as prescribed holders7 who can buy and

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sell SDRs.

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• Allocation of SDRs by IMF does not require contributions from

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donor countries’ budgets.

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• The more active use of SDRs would have three additional
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advantages: fo
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• It would spread across all countries the seigniorage generated by

issuing a global currency;
• It would reduce the demand from emerging markets and developing
economies for foreign exchange reserves as selfinsurance;
• It would make the international monetary system more independent of
US monetary policy.
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