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Q14 (IAS/2016) Economy › External Sector & Trade › International Monetary Fund Official Key

Recently, which one of the following currencies has been proposed to be added to the basket of IMF's SDR?

Result
Your answer: —  ·  Correct: D
Explanation

The correct answer is option D (Renminbi). On November 30, 2015, the IMF executive board announced its decision to incorporate the renminbi into the basket of currencies that comprise the IMF's special drawing rights (SDR), taking effect October 1, 2016.[3] This decision was made just before the 2016 exam and was a significant development in international finance. Chinese Renminbi was included in the SDR basket in 2016.[4] Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, pound sterling and the Chinese Renminbi (RMB)/Yuan.[5] The other currencies mentioned - Rouble, Rand, and Indian Rupee - were not proposed for inclusion in the SDR basket during this period. This addition of the Renminbi marked China's growing economic influence and was a historic change to the SDR composition.

Sources
  1. [1] https://www.frbsf.org/wp-content/uploads/Prasad-AEPC-2015.pdf
  2. [2] https://www.frbsf.org/wp-content/uploads/Prasad-AEPC-2015.pdf
  3. [3] https://www.frbsf.org/wp-content/uploads/Prasad-AEPC-2015.pdf
  4. [4] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Recent Reforms undertaken by IMF > p. 521
  5. [5] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
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PROVENANCE & STUDY PATTERN
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Don’t just practise – reverse-engineer the question. This panel shows where this PYQ came from (books / web), how the examiner broke it into hidden statements, and which nearby micro-concepts you were supposed to learn from it. Treat it like an autopsy of the question: what might have triggered it, which exact lines in the book matter, and what linked ideas you should carry forward to future questions.
Q. Recently, which one of the following currencies has been proposed to be added to the basket of IMF's SDR? [A] Rouble [B] Rand [C] Indi…
At a glance
Origin: Books + Current Affairs Fairness: Low / Borderline fairness Books / CA: 2.5/10 · 5/10

This is a textbook example of 'Headline Current Affairs' merging with 'Static Economy'. The inclusion of the Renminbi was a historic shift in the global financial order, making this a high-fairness, must-know question for any serious aspirant.

How this question is built

This question can be broken into the following sub-statements. Tap a statement sentence to jump into its detailed analysis.

Statement 1
In 2016, was the Indian Rupee proposed to be added to the IMF's Special Drawing Rights (SDR) basket?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"On November 30, 2015, the IMF executive board announced its decision to incorporate the renminbi into the basket of currencies that comprise the IMF’s special drawing rights (SDR), taking effect October 1, 2016."
Why this source?
  • Explicitly states the IMF decided to incorporate the renminbi (RMB) into the SDR basket, effective October 1, 2016.
  • Passage names RMB as the currency added in 2016, not the Indian rupee, implying the 2016 addition was RMB.
Web source
Presence: 5/5
"We welcome the inclusion of the RMB into the Special Drawing Rights (SDR) currency basket on 1October, 2016."
Why this source?
  • Declares: 'We welcome the inclusion of the RMB into the Special Drawing Rights (SDR) currency basket on 1October, 2016.'
  • Confirms RMB inclusion in 2016, and does not mention any proposal to add the Indian rupee in that context.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
Strength: 5/5
“International Economic Institutions This basket is reviewed after every 5 years. CONTRACT • The value of SDRs keeps changing due to continuous fluctuations in exchange rates (SDR was US$ 1.44 on 25 January 2021). • Unlike other currencies, SDR is not traded in forex market. • Criterion for inclusion of a currency in the SDR basket: • Export Criterion • " Issuer of the currency must be an IMF member/monetary union which has IMF members, and • " It should also be among the largest exporters of the world. However, it is difficult to make SDR so strong that it may replace US dollar as global reserve currency because the United States enjoys the maximum voting rights (17.46%) in the affairs of IMF.”
Why relevant

States the SDR basket is reviewed every 5 years and gives the formal criterion for inclusion (issuer must be an IMF member/monetary union and among the largest exporters).

How to extend

A student could check the timing of the five‑year reviews (e.g., 2010, 2015/2016, 2020) and compare India's export rank and IMF membership in 2016 to assess likelihood of a proposal.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 17: India’s Foreign Exchange and Foreign Trade > INTERNATIONALISATION OF RUPEE > p. 500
Strength: 4/5
“Indian rupee will be termed as 'internationalised' if: • Banks, firms and residents of another country start holding it for financial security.• It is accepted in international trade transactions. • Non-residents are eager to invest in rupee-denominated assets, etc. Pre-requisites of internationalisation of any currency include: • 1. Sufficiency in the availability of that currency. • 2. Stability of that currency. • 3. Liquidity of that currency. Presently, US Dollar, Euro, Pound Sterling, Yen and Renminbi may be termed 'international currencies'. Nepal or Bhutan hold India rupee along with their own official currencies (Nepalese Rupee and Bhutanese Ngultrum, respectively) for financial security and for cross-border trade.”
Why relevant

Lists pre‑requisites for a currency to be 'internationalised' — sufficiency, stability and liquidity — which are practical conditions related to SDR suitability.

How to extend

One could evaluate whether the rupee met these practical preconditions around 2016 using external facts (reserves, convertibility, market liquidity) to judge if a proposal was plausible.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
Strength: 4/5
“• IMF lends to member countries in its artificial currency unit known as Special Drawing Rights \bullet (SDRs). • Created in 1969, SDRs are the foreign exchange reserve assets under IMF. • SDR is not intrinsically a currency but is a unit of account maintained by IMF. ٠ • It is neither a proper currency nor a claim on IMF. \bullet • Its value is based on the basket of the following five major currencies: • 1. US Dollar 41.73 per cent • 2. Euro 30.93 per cent • 3. Chinese Renminbi 10”
Why relevant

Shows the SDR basket composition (five major currencies) and indicates the SDR is based on a basket of major currencies rather than many small ones.

How to extend

A student could compare India's currency status in 2016 with the currencies already present (e.g., size, global use) to infer how plausible an SDR addition would be.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
Strength: 3/5
“The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves in the context of the Bretton Woods fixed exchange rate system. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, pound sterling and the Chinese Renminbi (RMB)/Yuan.”
Why relevant

Explains SDR history and confirms the current basket contains the dollar, euro, yen, pound and renminbi — implying the SDR can and has been adjusted to include major emerging currencies (e.g., RMB).

How to extend

Using the example of RMB inclusion, one could research when that change occurred and whether similar conditions applied to the rupee around 2016 to evaluate if a proposal was likely then.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > India and IMF > p. 399
Strength: 3/5
“• India is a founder member of IMF• RBI adopted Special Data Dissemination Standards (SDDS) of IMF• As per our commitment, India adopted current account convertibility in 1994• Methodology of National Income Accounting was changed (to Market Prices) in 2015• IMF's regional training institute is in Delhi to provide training to government officials• India is a net lender to IMF”
Why relevant

Notes India's standing with the IMF (founder member, adoption of IMF standards), indicating India had the institutional relationship required by the inclusion criterion.

How to extend

Combine this institutional fact with export and currency metrics from 2016 to determine if India met formal and practical conditions for a rupee SDR proposal.

Statement 2
In 2016, was the Chinese Renminbi proposed to be added to the IMF's Special Drawing Rights (SDR) basket?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Recent Reforms undertaken by IMF > p. 521
Presence: 5/5
“• More influencing power to the Developing member nations: • More than 6 per cent transfer of voting rights from the United States and European countries to emerging member nations. • Increase in voting rights of: • India, from 2.3 per cent to 2.64 per cent. • China, from 3.8 per cent to 6 per cent. • Chinese Renminbi was included in the SDR basket in 2016.”
Why this source?
  • Explicitly states: 'Chinese Renminbi was included in the SDR basket in 2016.'
  • Directly affirms the timing (2016) and the inclusion outcome.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
Presence: 4/5
“• IMF lends to member countries in its artificial currency unit known as Special Drawing Rights \bullet (SDRs). • Created in 1969, SDRs are the foreign exchange reserve assets under IMF. • SDR is not intrinsically a currency but is a unit of account maintained by IMF. ٠ • It is neither a proper currency nor a claim on IMF. \bullet • Its value is based on the basket of the following five major currencies: • 1. US Dollar 41.73 per cent • 2. Euro 30.93 per cent • 3. Chinese Renminbi 10”
Why this source?
  • Lists the SDR basket currencies and includes the Chinese Renminbi among them.
  • Supports the fact of Renminbi's membership in the SDR composition.
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
Presence: 4/5
“The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves in the context of the Bretton Woods fixed exchange rate system. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, pound sterling and the Chinese Renminbi (RMB)/Yuan.”
Why this source?
  • States the current SDR basket includes the Chinese Renminbi (RMB)/Yuan.
  • Corroborates that the Renminbi is part of the SDR currency basket.
Statement 3
In 2016, was the South African Rand proposed to be added to the IMF's Special Drawing Rights (SDR) basket?
Origin: Web / Current Affairs Fairness: CA heavy Web-answerable

Web source
Presence: 5/5
"On November 30, 2015, the IMF executive board announced its decision to incorporate the renminbi into the basket of currencies that comprise the IMF’s special drawing rights (SDR), taking effect October 1, 2016."
Why this source?
  • Explicitly states the IMF decision to incorporate the Chinese renminbi into the SDR, effective October 1, 2016.
  • By identifying the renminbi as the currency added in 2016, this passage indicates which currency was proposed/accepted that year (renminbi), not the South African rand.
Web source
Presence: 5/5
"We welcome the inclusion of the RMB into the Special Drawing Rights (SDR) currency basket on 1October, 2016."
Why this source?
  • Confirms the inclusion of the RMB into the SDR currency basket on 1 October 2016.
  • This passage reinforces that the renminbi — not the South African rand — was the currency welcomed into the SDR in 2016.
Web source
Presence: 5/5
"renminbi is also making inroads into the global financial system ... It is set to become a constituent of the basket of currencies that com-prise the IMF’s special drawing rights."
Why this source?
  • States the renminbi 'is set to become a constituent of the basket of currencies that comprise the IMF’s special drawing rights.'
  • Again identifies the renminbi as the currency being added around 2016, with no mention of the South African rand being proposed for SDR inclusion.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
Strength: 5/5
“• IMF lends to member countries in its artificial currency unit known as Special Drawing Rights \bullet (SDRs). • Created in 1969, SDRs are the foreign exchange reserve assets under IMF. • SDR is not intrinsically a currency but is a unit of account maintained by IMF. ٠ • It is neither a proper currency nor a claim on IMF. \bullet • Its value is based on the basket of the following five major currencies: • 1. US Dollar 41.73 per cent • 2. Euro 30.93 per cent • 3. Chinese Renminbi 10”
Why relevant

Lists the currencies that make up the SDR basket (US dollar, euro, yen, pound, and Chinese renminbi) — Rand is not listed.

How to extend

A student could use this list to note which currency was actually included and then check 2016 SDR review outcomes to see if Rand appears.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
Strength: 4/5
“The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves in the context of the Bretton Woods fixed exchange rate system. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, pound sterling and the Chinese Renminbi (RMB)/Yuan.”
Why relevant

Explains the SDR basket composition and that it is a basket of major currencies (same five currencies named).

How to extend

Compare the named currencies with candidates proposed in 2016; absence of Rand here suggests it was not part of the resulting basket.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
Strength: 4/5
“International Economic Institutions This basket is reviewed after every 5 years. CONTRACT • The value of SDRs keeps changing due to continuous fluctuations in exchange rates (SDR was US$ 1.44 on 25 January 2021). • Unlike other currencies, SDR is not traded in forex market. • Criterion for inclusion of a currency in the SDR basket: • Export Criterion • " Issuer of the currency must be an IMF member/monetary union which has IMF members, and • " It should also be among the largest exporters of the world. However, it is difficult to make SDR so strong that it may replace US dollar as global reserve currency because the United States enjoys the maximum voting rights (17.46%) in the affairs of IMF.”
Why relevant

States the SDR basket is reviewed every 5 years and gives inclusion criteria (issuer must be IMF member and among largest exporters).

How to extend

A student can apply these criteria to South Africa (check IMF membership and export ranking) to assess whether the Rand would plausibly meet requirements for 2016 consideration.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Recent Reforms undertaken by IMF > p. 521
Strength: 5/5
“• More influencing power to the Developing member nations: • More than 6 per cent transfer of voting rights from the United States and European countries to emerging member nations. • Increase in voting rights of: • India, from 2.3 per cent to 2.64 per cent. • China, from 3.8 per cent to 6 per cent. • Chinese Renminbi was included in the SDR basket in 2016.”
Why relevant

Specifically notes that the Chinese Renminbi was included in the SDR basket in 2016.

How to extend

Since RMB was the currency added in 2016, a student could infer the 2016 change involved RMB rather than Rand and then verify whether any proposal for Rand was made separately.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 17: India’s Foreign Exchange and Foreign Trade > WHICH EXCHANGE RATE SYSTEM SUITS AN ECONOMY BEST? > p. 494
Strength: 2/5
“For small economies with a dominant trading partner that maintains a reasonably stable monetary policy, fixed exchange rate system is suitable. And this has been found to be true internationally in the case of many small economies like small Caribbean islands, small Central American countries and small Pacific Island countries. Currencies of Nepal and Bhutan are also pegged to the Indian Rupee. Moreover, currencies of Africa, Namibia, Swaziland, etc., are pegged to the South African Rand. Moreover, economies with huge export surplus and enormous forex reserves like China are able to follow a fixed exchange rate regime. The other available options are free float and managed float.”
Why relevant

Mentions that several African currencies are pegged to the South African Rand, indicating regional monetary importance of the Rand.

How to extend

A student could weigh this regional significance against the SDR inclusion criteria to judge whether regional pegging alone would make Rand a likely SDR candidate in 2016.

Statement 4
In 2016, was the Russian Rouble proposed to be added to the IMF's Special Drawing Rights (SDR) basket?
Origin: Weak / unclear Fairness: Borderline / guessy
Indirect textbook clues
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
Strength: 5/5
“International Economic Institutions This basket is reviewed after every 5 years. CONTRACT • The value of SDRs keeps changing due to continuous fluctuations in exchange rates (SDR was US$ 1.44 on 25 January 2021). • Unlike other currencies, SDR is not traded in forex market. • Criterion for inclusion of a currency in the SDR basket: • Export Criterion • " Issuer of the currency must be an IMF member/monetary union which has IMF members, and • " It should also be among the largest exporters of the world. However, it is difficult to make SDR so strong that it may replace US dollar as global reserve currency because the United States enjoys the maximum voting rights (17.46%) in the affairs of IMF.”
Why relevant

States the SDR basket is reviewed every 5 years and lists formal criteria for inclusion (issuer must be IMF member/monetary union and among largest exporters).

How to extend

A student can check the timing of reviews (e.g., 2015–2016) and whether Russia met IMF membership and export-size criteria in 2016 to assess plausibility of a proposal.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Recent Reforms undertaken by IMF > p. 521
Strength: 5/5
“• More influencing power to the Developing member nations: • More than 6 per cent transfer of voting rights from the United States and European countries to emerging member nations. • Increase in voting rights of: • India, from 2.3 per cent to 2.64 per cent. • China, from 3.8 per cent to 6 per cent. • Chinese Renminbi was included in the SDR basket in 2016.”
Why relevant

Records that the Chinese Renminbi was included in the SDR basket in 2016, showing that a change to the basket occurred that year.

How to extend

A student could use this to infer 2016 was an active review/addition year and search contemporaneous proposals (e.g., for other currencies such as the rouble).

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
Strength: 4/5
“The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries' official reserves in the context of the Bretton Woods fixed exchange rate system. The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, the SDR was redefined as a basket of currencies. Currently, the SDR basket consists of the U.S. dollar, euro, Japanese yen, pound sterling and the Chinese Renminbi (RMB)/Yuan.”
Why relevant

Gives the current SDR basket composition (USD, euro, yen, pound sterling, Renminbi), implying the basket contains five major currencies.

How to extend

A student can reason that adding the rouble would require meeting inclusion rules and possibly replacing or expanding the five-currency composition; they can check 2016 proposals or IMF press releases for any rouble proposal.

Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
Strength: 3/5
“• IMF lends to member countries in its artificial currency unit known as Special Drawing Rights \bullet (SDRs). • Created in 1969, SDRs are the foreign exchange reserve assets under IMF. • SDR is not intrinsically a currency but is a unit of account maintained by IMF. ٠ • It is neither a proper currency nor a claim on IMF. \bullet • Its value is based on the basket of the following five major currencies: • 1. US Dollar 41.73 per cent • 2. Euro 30.93 per cent • 3. Chinese Renminbi 10”
Why relevant

Provides the percentage shares of currencies in the SDR basket and lists the currencies (including Renminbi) used to determine SDR value.

How to extend

A student could compare the listed currencies and their shares with 2016 IMF documentation to see if the rouble was ever mentioned as a candidate for inclusion.

Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > International Monetary Fund (IMF) > p. 397
Strength: 2/5
“IMF was established in 1944. When a country joins the IMF, it is assigned a Quota which is based on the country's GDP (50%), openness (30%), economic variability (which means fluctuations in current and capital account, 15%) and international reserves (5%). Quotas are denominated in Special Drawing Rights (SDRs), the IMF's unit of account. A member's quota subscription determines the maximum amount of financial resources the member is obliged to provide to the IMF. A member must pay its subscription in full upon joining IMF: up to 25% must be paid in SDRs or widely accepted currencies (US dollar, Euro, Yen, Pound, Yuan) while the rest 75% is paid in the member's own currency.”
Why relevant

Notes that quotas and some IMF operations use SDRs and that widely accepted currencies include USD, Euro, Yen, Pound, Yuan—highlighting which currencies IMF treats as widely accepted.

How to extend

A student might use this to evaluate whether the rouble was considered 'widely accepted' or a likely candidate in 2016 by comparing international usage metrics from that year.

Pattern takeaway: UPSC focuses on 'Global Power Shifts'. The entry of the Chinese Yuan into the SDR wasn't just a banking detail; it was a geopolitical signal of China's rise. Always view economic news through the lens of shifting global influence.
How you should have studied
  1. [THE VERDICT]: Sitter. This was the biggest financial news of 2015-16. Covered in every newspaper and standard economy material (Singhania/Vivek Singh).
  2. [THE CONCEPTUAL TRIGGER]: International Economic Organizations (IMF) > Special Drawing Rights (SDR) > Composition of the Basket.
  3. [THE HORIZONTAL EXPANSION]: Memorize the 5 currencies (USD, Euro, Yuan, Yen, Pound) and their relative weights (USD ~43%, Euro ~29%, Yuan ~12%). Understand the two criteria for inclusion: 'Export Criterion' and 'Freely Usable Criterion'.
  4. [THE STRATEGIC METACOGNITION]: When studying global bodies (UNSC, IMF, NSG), always track 'Membership Changes' or 'Structure Changes'. If a BRICS nation breaks into a Western-dominated club, it is a guaranteed question.
Concept hooks from this question
📌 Adjacent topic to master
S1
👉 Current SDR basket composition
💡 The insight

Several references list which currencies make up the SDR (USD, euro, yen, pound, renminbi) — this is directly relevant when evaluating any proposal to add the rupee.

High-yield for GS/Economics: knowing the SDR composition helps answer questions on global reserve currencies, IMF unit-of-account, and shifts in international monetary weight. It connects to topics on currency importance, trade invoicing and geopolitical economic influence. Learn by memorising current basket members and tracking changes across review cycles.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
🔗 Anchor: "In 2016, was the Indian Rupee proposed to be added to the IMF's Special Drawing ..."
📌 Adjacent topic to master
S1
👉 Criteria and review cycle for SDR inclusion
💡 The insight

One reference states the SDR basket is reviewed every five years and outlines criteria (issuer must be IMF member/monetary union and be among largest exporters) — essential to assess whether the rupee could be added.

Frequently tested concept: knowing procedural criteria and review periodicity lets aspirants evaluate realistic prospects for currency inclusion and answer policy-analysis questions. Connects to IMF governance, trade metrics, and currency internationalisation. Prepare by linking criteria to country data (exports, IMF membership) and timeline of SDR reviews.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
🔗 Anchor: "In 2016, was the Indian Rupee proposed to be added to the IMF's Special Drawing ..."
📌 Adjacent topic to master
S1
👉 Internationalisation prerequisites for a currency
💡 The insight

References describe what makes a currency 'internationalised' (availability, stability, liquidity, acceptance) — these are the practical conditions relevant to any proposal to add the rupee to SDR.

Useful across GS and Economy papers: mastering prerequisites helps evaluate India's currency policy, capital account convertibility, and external sector readiness. It ties into questions on forex reserves, capital flows and policy reforms. Study by mapping prerequisites to India's macro indicators and policy measures.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 17: India’s Foreign Exchange and Foreign Trade > INTERNATIONALISATION OF RUPEE > p. 500
🔗 Anchor: "In 2016, was the Indian Rupee proposed to be added to the IMF's Special Drawing ..."
📌 Adjacent topic to master
S2
👉 SDR basket composition & review cycle
💡 The insight

The references state which currencies compose the SDR and note that the basket is reviewed periodically (every 5 years).

High-yield for UPSC: questions often ask about IMF instruments and how reserve assets are determined. Mastering composition and the review cycle helps answer both static (which currencies) and process (how changes occur) questions. Study by memorising current basket and the review/criteria rules from standard sources and practising application-based MCQs.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
🔗 Anchor: "In 2016, was the Chinese Renminbi proposed to be added to the IMF's Special Draw..."
📌 Adjacent topic to master
S2
👉 Criteria for inclusion of a currency in the SDR
💡 The insight

References list the inclusion criteria (issuer must be an IMF member and currency should be among largest exporters).

Important for UPSC to evaluate why a currency qualifies for SDR inclusion and to analyse policy implications of adding emerging-market currencies. Links to topics on global trade, IMF membership rules and international monetary reforms. Prepare by learning criteria and practising short-answers that apply criteria to countries/currencies.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 515
🔗 Anchor: "In 2016, was the Chinese Renminbi proposed to be added to the IMF's Special Draw..."
📌 Adjacent topic to master
S2
👉 IMF governance reforms and emerging economies' influence
💡 The insight

References mention IMF reforms that increased voting shares for emerging members and note China's increased quota/share alongside RMB inclusion.

Useful for essay and governance portions: shows connection between institutional reform (quotas/voting) and realignment of global monetary instruments. Helps answer questions on global power shifts, multilateral institutions and reform dynamics. Prepare by linking quota reforms to specific outcomes (e.g., currency inclusion) using textbook sources.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > Recent Reforms undertaken by IMF > p. 521
🔗 Anchor: "In 2016, was the Chinese Renminbi proposed to be added to the IMF's Special Draw..."
📌 Adjacent topic to master
S3
👉 SDR basket composition
💡 The insight

Several references define what currencies make up the SDR and show the current basket components.

High-yield topic for UPSC: knowing which major currencies comprise the SDR and that it is a currency basket is frequently tested in economy and international institutions questions. It links to questions on global reserve currencies, IMF functions and balance-of-payments. Learn by memorising current basket members and reading IMF review cycles.

📚 Reading List :
  • Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 18: International Economic Institutions > SPECIAL DRAWING RIGHTS > p. 514
  • Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 13: International Organizations > Special Drawing Rights (SDR): > p. 398
🔗 Anchor: "In 2016, was the South African Rand proposed to be added to the IMF's Special Dr..."
🌑 The Hidden Trap

The 'Freely Usable' criterion. While China met the export volume requirement long ago, it was the 'Freely Usable' (widely used in payments and traded in exchange markets) condition that delayed its entry until 2016. The Rupee fails this specific test due to partial capital account convertibility.

⚡ Elimination Cheat Code

Apply the 'Global Reserve Logic'. SDR is a reserve asset held by central banks. Ask yourself: Which currency is stable and massive enough to be held as a safe asset alongside the Dollar and Euro? Rouble (volatile/sanctions), Rand (too small), and Rupee (restricted convertibility) do not fit. Only the Renminbi (China = World's Factory) has the scale to be a global reserve.

🔗 Mains Connection

Link this to GS3 (Indian Economy) - 'Internationalisation of the Rupee'. The Yuan's journey to SDR is the blueprint for the Rupee. Use this comparison in Mains answers regarding Capital Account Convertibility (Tarapore Committee) and de-dollarization efforts.

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SIMILAR QUESTIONS

CDS-I · 2010 · Q54 Relevance score: -3.60

Which one of the following countries' Central Bank has procured 200 metric tons of gold from the IMF in October 2009 ?

IAS · 1998 · Q91 Relevance score: -3.97

Which one of the following is the correct sequence of decreasing order of the given currencies in terms of their value in Indian Rupees ?

CDS-II · 2014 · Q50 Relevance score: -4.23

Which of the following statements about International Monetary Fund (IMF) are correct ? 1. The IMF is a United Nations specialized agency. 2. The IMF was founded at the Bretton Woods Conference in 1944 to secure international monetary cooperation. 3. The objective of the IMF is to stabilize currency exchange rates, and to expand international liquidity (access to hard currencies). Select the correct answer using the code given below:

NDA-II · 2017 · Q46 Relevance score: -4.23

Who among the following is the Chairman of the Interdisciplinary Committee constituted recently by the Government of India to examine framework for virtual currencies ?

IAS · 2013 · Q58 Relevance score: -4.53

Which one of the following groups of items is included in India’s foreign-exchange reserves?