Question map
Not attempted Correct Incorrect ★ Bookmarked
Loading…
Q63 (IAS/2019) Economy › External Sector & Trade › External debt dynamics Official Key

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?

Result
Your answer: —  Âˇ  Correct: D
Explanation

The correct answer is option D - Neither statement 1 nor 2 is correct.

**Statement 1 is incorrect** because non-government debt is generally much higher than the government debt[2]. The documents clearly show that in 2022, out of India's total external debt of $610.5 billion, sovereign debt was only $124.5 billion (3.9% of GDP) while non-sovereign debt was $486 billion (15.3% of GDP)[3]. This means most of India's external debt is actually owed by non-governmental entities like corporates, not by the government.

**Statement 2 is incorrect** because India's external debt is denominated in multiple currencies, not just US dollars. India's external debt includes US Dollar denominated (55.5%), Indian Rupee denominated (30%), and then some is SDR, Yen, Euro[3]. While US dollars constitute the largest share, it accounts for only about 55-56% of the total, with significant portions in Indian Rupee and other currencies.

Therefore, both statements are incorrect, making option D the right answer.

Sources
  1. [1] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 16: Balance of Payments > 16.18 Indian Economy > p. 486
  2. [2] Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 16: Balance of Payments > 16.18 Indian Economy > p. 486
  3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Govt. of India (Central Govt.) Total Debt/Liabilities = 1 + 2 + 3 + 4 > p. 163
How others answered
Each bar shows the % of students who chose that option. Green bar = correct answer, blue outline = your choice.
Community Performance
Out of everyone who attempted this question.
50%
got it right
PROVENANCE & STUDY PATTERN
Guest preview
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. Consider the following statements : 1. Most of India's external debt is owed by governmental entities. 2. All of India's external debt is…
At a glance
Origin: From standard books Fairness: High fairness Books / CA: 10/10 ¡ 0/10
You're seeing a guest preview. The Verdict and first statement analysis are open. Login with Google to unlock all tabs.

This is a foundational static economy question derived directly from standard textbooks and the Economic Survey. It tests basic structural knowledge of India's Balance of Payments. Missing this indicates a failure to read the 'composition' tables in your primary source.

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
What percentage or share of India's external debt is owed by governmental entities (central and state governments and public sector) as of the latest available data?
Origin: Direct from books Fairness: Straightforward Book-answerable
From standard books
Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > Govt. of India (Central Govt.) Total Debt/Liabilities = 1 + 2 + 3 + 4 > p. 163
Presence: 5/5
“2022, external debt of India was $610.5 Billion (19.2% of GDP). $610.5 billion = 19.2% of GDP "Sovereign Debt" | "Non-Sovereign Debt" • $124.5 billion (3.9% of GDP) | $486 billion (15.3% of GDP) • Sovereign Debt is also called Govt. of India | It includes • (external) Debt • (State Govt. external debt is in the name of |  Commercial Borrowing • GoI only) |  External Commercial Borrowing ECB • plus FII investments in Indian • It includes | corporate bonds FPI/FII investments in G-securities Loans under Bilateral Assistance |  NRI Deposits Loans under Multilateral Assistance • India's external debt can also be classified as 'short-term' (21.6%) and long-term debt.• Commercial borrowings remained the largest component of external debt followed by non-resident deposits.• Currency wise, India's external debt includes: • o US Dollar denominated (55.5%)• o Indian Rupee denominated (30%)• o And then some is SDR, Yen, Euro.”
Why this source?
  • Gives a numeric total external debt ($610.5 billion) and a clear sovereign (government) vs non‑sovereign split ($124.5B sovereign; $486B non‑sovereign).
  • Enables direct calculation of government share ≈ 124.5 / 610.5 ≈ 20.4% of total external debt.
Indian Economy, Nitin Singhania .(ed 2nd 2021-22) > Chapter 16: Balance of Payments > 16.18 Indian Economy > p. 486
Presence: 4/5
“• In 2019-20, ECBs remained the largest component of India's external debt, with a share of 38 per cent, followed by NRI deposits (23.2%). • In 2020-21, US dollar-denominated debt continued to be the largest component of India's external debt with a share of 53.9 per cent at the end of June 2020, followed by the Indian Rupee (31.6%), Japanese Yen (5.7%), SDR (4.5%) and Euro (3.5%). • Non-government debt is generally much higher than the government debt.”
Why this source?
  • Explicitly notes that non‑government debt is generally much higher than government debt, corroborating that the government share is a minority portion.
  • Provides contextual support that the bulk of external debt is non‑sovereign, consistent with the numeric split in index 2.
Statement analysis

This statement analysis shows book citations, web sources and indirect clues. The first statement (S1) is open for preview.

Login with Google to unlock all statements.

How to study

This tab shows concrete study steps: what to underline in books, how to map current affairs, and how to prepare for similar questions.

Login with Google to unlock study guidance.

Micro-concepts

Discover the small, exam-centric ideas hidden in this question and where they appear in your books and notes.

Login with Google to unlock micro-concepts.

The Vault

Access hidden traps, elimination shortcuts, and Mains connections that give you an edge on every question.

Login with Google to unlock The Vault.

✓ Thank you! We'll review this.

SIMILAR QUESTIONS

IAS ¡ 2002 ¡ Q87 Relevance score: 4.24

With reference to the Indian Public Finance consider the following statements: 1. External liabilities reported in Union Budget are based on historical exchange rates 2. The continued high borrowing has kept the real interest rates high in the economy 3. The upward trend in the ratio of Fiscal Deficit to GDP in recent years has an adverse effect to private investments. 4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government. Which of these statements are correct ?

IAS ¡ 2022 ¡ Q100 Relevance score: 4.16

With reference to the Indian economy, consider the following statements: 1. A share of the household financial savings goes towards government borrowings. 2. Dated securities issued at market-related rates in auctions form a large component of internal debt. Which of the above statements is/are correct?

IAS ¡ 2024 ¡ Q42 Relevance score: 3.71

Consider the following statements : 1. In India, Non-Banking Financial Companies can access the Liquidity Adjustment Facility window of the Reserve Bank of India. 2. In India, Foreign Institutional Investors can hold the Government Securities (G-Secs). 3. In India, Stock Exchanges can offer separate trading platforms for debts. Which of the statements given above is/are correct ?

CAPF ¡ 2008 ¡ Q35 Relevance score: 2.58

Consider the following statements : 1. No money bill can be introduced in the Parliament without the recommendation of the President of India. 2. The Prime Minister appoints Finance Commission for distribution of taxes between the Union and the States. Which of the statements given above is/are correct ?

IAS ¡ 2003 ¡ Q50 Relevance score: 2.36

Consider the following statements: In India, stamp duties on financial transactions are 1. levied and collected by the State Government 2. appropriated by the Union Government. Which of these statements is/are correct?