Statement 1 is incorrect. India's external debt is owed by various sectors, including sovereign (government) and non-sovereign entities (such as corporate sector, banks, and NRI depositors). Data from the Reserve Bank of India (RBI) consistently shows that non-sovereign debt constitutes a larger portion of India's total external debt than sovereign debt. For instance, non-sovereign debt often accounts for over three-fourths of the total external debt.Statement 2 is incorrect. India's external debt is denominated in multiple currencies. While the US dollar is the dominant currency, a significant portion is also denominated in Indian Rupees (e.g., Rupee Denominated Bonds held by non-residents), SDRs, Japanese Yen, Euro, and other currencies. Therefore, not all of India's external debt is denominated in US dollars.
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?
Asked in UPSC IAS 2019 · Topic: Balance of Payments (BoP) (Components of BoP: Capital Account (FDI, FII, External Borrowings, NRI Deposits))
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