New Delhi, July 5 -- Every year, the government of India backs the borrowings and financial obligations of public sector entities, banks, cooperatives, and strategic projects by extending sovereign guarantees. These high-stakes financial commitments are officially disclosed in each Union budget under the 'statement on guarantees given by the government', which is governed by the Fiscal Responsibility and Budget Management (FRBM) Rules, 2004.

According to the latest available data, the Centre's outstanding sovereign guarantees stood at Rs.3,33,455 crore at the end of FY25.

What exactly are these guarantees, and why do they matter to the economy? Mint explains.

A sovereign guarantee is a commitment by the Indian government to repay the p...