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 statement given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer:
D
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Explanation:
1. Statement 1 is incorrect: Most of India's external debt is not owed by governmental entities. India's external debt includes borrowings by both the government and the private sector. While the government does have a significant share of external debt, it is not the majority.
2. Statement 2 is also incorrect: All of India's external debt is not denominated in US dollars. India's external debt is denominated in various currencies, including but not limited to US dollars. The currency composition of India's external debt reflects the borrowing arrangements and agreements with different lenders.