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 denominated in US dollars.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: D
Notes:

Explanation: 

  • Statement 1 is incorrect: According to the RBI data, the largest share of external debt is held by non-financial corporations (35.5%), followed by deposit-taking corporations (27.5%), while the general government holds only about 22.9%. So, most of India’s external debt is not owed by the government.
  • Statement 2 is incorrect: While the US dollar dominates (54.2%) India’s external debt composition, it is not the only currency –  the Indian rupee (31.1%), Japanese yen, and SDRs also form part of the external debt.

Source- BS

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