Sovereign Debt, National debt, Fiscal deficit VS public debt,

 

National debt /Sovereign Debt /Public Debt :

• Debt taken by the governments is national debt.
• It is said to be national as it is backed by the government which is national power.
• Public debt consists of budgetary as well as extra budgetary borrowings of the govt.
• Public debt is the accumulated borrowings of the govt over a period of time
• This type of debts are most reliable in the sense that such debt can't default as government is backing such debt.
• Default on national debt means government has failed .
• It can be from internal sources as well as external sources.

Internal debt can be of following types :

●       Market loans

●       Market Stabilisation Bills / Bonds

●       Treasury Bills

●       Other Special Securities issued to RBI

●       Ways and Means Advances /14 days T-Bills

●       Securities against Small Savings

●       Cash Management Bills

Special Securities Issued to Public Sector Banks

External National debt includes:

• External Debt under the ‘External Assistance’ programme 
• Multilateral loans (debt from Multilateral Creditors such as the International Development Association (IDA), International Bank for Reconstruction and Development (IBRD), Asian Development Bank (ADB) etc. 
• Bilateral Debt (debt from sovereign countries with whom sovereign and non-sovereign entities enter into one-to-one loan arrangements). 
• Other Government Debt includes IMF Loans, FPI investment in G-sec and defence debt .

Fiscal deficit VS public debt:

1. Fiscal Deficit includes exclusively the budgetary borrowings.
2. Fiscal deficit is the borrowings of the government for the current year

                                            while 

1. public debt consists of budgetary as well as extra budgetary borrowings of the govt. 
2. public debt provides a better and holistic picture as compared to fiscal deficit.