The breakdown of the overall debt and financial commitments owing by the government at a specific moment in time is known as the Composition of Outstanding Liabilities. These liabilities typically consist of external debt (loans from overseas sources, frequently in foreign currencies), internal debt (market loans, securities, and borrowings from financial institutions), and other commitments such as public account liabilities (small savings, provident funds, and other deposits). In addition to the amount of government debt, the composition shows the type of debt, including short-term versus long-term, domestic versus foreign, and interest-bearing versus non-interest obligations.

Assessing the sustainability and fiscal health of government finances requires an understanding of the makeup of outstanding liabilities. While a greater proportion of long-term internal debt may indicate stability, an overabundance of external borrowing may make a country more susceptible to changes in interest rates and currency values around the world. The government’s interest payment burden, refinancing risks, and fiscal flexibility are all impacted by the structure of its liabilities. This information is used by international organizations, investors, and policymakers to assess the nation’s creditworthiness and debt sustainability. Monitoring the composition of liabilities for India guarantees that borrowing plans meet developmental requirements without jeopardizing long-term growth prospects, intergenerational equity, or macroeconomic stability.