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?
✓ Correct answer: d) Neither 1 nor 2
ExplanationStatement 1 is incorrect : While the government does hold a portion of India’s external debt, the majority of it is owed by non-governmental entities, primarily corpora- tions.As of end-March 2023, India’s total external debt stood at approximately USD 624.7 billion.Of this, the government’s ex- ternal debt was about USD 130.8 billion, accounting for roughly 20.9% of the total external debt.The remaining 79.1% is owed by non-governmental entities, including private sector corporations and financial institutions.Statement 2 is incorrect : While a significant portion of In- dia’s external debt is indeed denominated in US dollars, it’s not all in US dollars.Indian entities also borrow in other currencies, such as Euros, Japanese Yen, and British Pounds, among others.Diversification of currency exposure is a com- mon practice in debt management.India’s external debt is de- nominated in various currencies.As of end-March 2023, 53.1% of the debt was in US dollars, 31.1% in Indian rupees, 5.7% in Japanese yen, 3.5% in Special Drawing Rights (SDRs), 2.9% in eu- ros, and the remaining
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