The recent auction of securities by the Government of Sikkim, conducted through the Reserve Bank of India, worth Rs. 500 crore, has caught the attention of the media and the civil society alike.
Independent media outlets highlighted the potential risks this could pose to the state’s financial health. Opposition parties also raised concerns about the rising debt through social media posts.
Yet, for a large part of the public, this issue remains distant, as many have only a limited understanding of government securities and how such borrowings work.
Before examining the implications, it is important to understand the basics. Governments borrow money through securities, promising investors interest at regular intervals…