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?
Show answer
Answer: D. Statement 1 is wrong: most of India's external debt is non-government (commercial borrowings, NRI deposits, short-term trade credit); government debt is only about a fifth. Statement 2 is wrong: although most is in US dollars, part is in rupees, yen, SDR and euros. So neither.
Watch for: The word 'All' in statement 2 is the giveaway, but students who know the dollar share is large may accept it.
Why the other options are wrong
- A. Wrong because most external debt is owed by non-government borrowers.
- B. Wrong because external debt is held in several currencies, not only dollars.
- C. Wrong because both statements are false.
Source to check: Ministry of Finance, India's External Debt: A Status Report 2017-18; RBI quarterly external debt data
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.