Civil Services Prep

Prelims 2019 · Economy · Question 13

Consider the following statements:

  1. Most of India's external debt is owed by governmental entities.
  2. All of India's external debt is denominated in US dollars.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer

Neither 1 nor 2

1. Incorrect. India’s external debt is not mostly owed by governmental entities; a large share is owed by non-government sectors, especially corporates and other borrowers.
2. Incorrect. India’s external debt is not entirely in US dollars; it is denominated in multiple currencies such as US dollar, Indian rupee, yen, SDR, and others.
Therefore, neither statement 1 nor statement 2 is correct.

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