UPSC Prelims 2019 Question:

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?

Explanation:

• As per the standard practice, the Reserve Bank of India releases India's external debt statistics regularly with a lag of one quarter.
  
  
• Commercial borrowings continue to be the largest component of external debt with a share of 37.1 percent, followed by NRI deposits (23.9 percent) and short-term trade credit (19.9 percent). So, statement 1 is not correct.
  
  
• The statistics released by the RBI contain data on external debt in Indian rupees, US dollars, yen, etc. US dollar-denominated debt continued to be the largest component of India’s external debt with a share of 49.7 percent in end-September 2018, followed by the Indian rupee (36.1 percent), SDR (5.3 percent), yen (4.7 percent), and euro (3.2 percent). So, statement 2 is not correct.
  
  

Therefore, option (4) is the correct answer.

Subject: Economy | Foreign Trade and Investment