Consider the following statements: 1. Most of Indias external debt is owed by governmental entities. 2. All of Indias external debt is denominated in US dollars. Which of the statements given above is / are correct?

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Submitted by examrobotsa on

Q: 13 (IAS/2019)
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?

question_subject: 

Economics

question_exam: 

IAS

stats: 

0,176,188,96,25,67,176

keywords: 

{'external debt': [0, 0, 1, 0], 'us dollars': [0, 2, 1, 2], 'governmental entities': [0, 0, 0, 1], 'india': [8, 1, 7, 13]}

The correct answer is option 4 - Neither 1 nor 2.

Statement 1 suggests that a majority of India`s external debt is owed by governmental entities. However, this is not the case. A significant part of India`s external debt is owed by the private sector.

Statement 2 states that all of India`s external debt is denominated in US dollars. This is incorrect as well. While the US dollar does comprise a major portion of our external debt, it is not the only currency. External debt is also denominated in other major global currencies such as the Euro, Japanese Yen, and Swiss Franc among others.

Therefore, both statements are fundamentally incorrect, and that`s why the correct option is 4 – Neither 1 nor 2.