Foreign Exchange, FDI & External Debt (Part – II)

Total Questions: 50

31. Which among the following institutions regulates the external commercial borrowings? [U.P.P.C.S. (Mains) 2010]

Correct Answer: (d) Reserve Bank of India
Note:

External commercial borrowings (ECBs) are commercial loans raised by eligible entities from recognized non-resident entities. The Reserve Bank of India regulates ECBs by specifying parameters, such as eligible borrowers and lenders, permitted end use, minimum average maturity period, maximum all-in-cost ceiling, etc.

 

32. According to the World Bank's Global Development Finance Report 2010, the correct descending order of the world's five most indebted countries is: [U.P.P.C.S. (Pre) 2011*]

Correct Answer: (b) Russia, China, Turkey, Brazil, India
Note:

As per the question period option (b) was the correct answer for emerging economies. As per 'India's External Debt A Status Report 2022-23', top 5 emerging market and developing economies in terms of gross external debt stock at end-December, 2022 are as follows: 1. China, 2. Brazil, 3. India, 4. Mexico, 5. Turkey (Turkiye).

 

33. As on today, which one of the following countries has the largest external debt? [I.A.S. (Pre) 1993]

Correct Answer: (c) USA
Note:

As per "India's External Debt: A Status Report 2022-23', USA is the most heavily indebted country in the world with gross external debt stock estimated at US $ 24.5 trillion, constituting 26.3 percent of the total global debt at end-December, 2022. Following the USA are the UK (9.5 percent), France (7.4 percent), Germany (6.9 percent) and Japan (4.6 percent). China is at 11th position globally in terms of external debt stock.

 

34. On the basis of size and composition of external debt, World Bank has classified India as : [U.P.P.C.S. (Mains) 2009]

Correct Answer: (b) a less indebted country
Note:

World Bank has classified India as less indebted country on the basis of size of external debt and its components and debt to GDP ratio. As per the Ministry of Finance, Government of India, India's external debt continues to be sustain able and prudently managed. As at end-December 2023 (P), India's external debt as a ratio to GDP fell marginally to 18.7 percent from 18.8 percent as at end-September 2023 (PR). Forex reserves to external debt ratio, is increased to 96 per- cent from 92.2 percent during the same period, thereby consolidating India's position as a net creditor to the world.

 

35. Which country has highest loan from the World Bank after India till June, 2010? [R.A.S./R.T.S.(Pre) 2010]

Correct Answer: (c) Mexico
Note:

As per the question period, option (c) was the correct answer. According to World Bank's data, 5 countries having highest debt stock of IBRD loans and IDA credits (DOD, current US $) in 2022 are as follows: 1. India (US $ 38.26 billion), 2. Indonesia (US $ 20.63 billion), 3. Bangladesh (US $18.23 billion), 4. Pakistan (US $ 18.07 billion), 5. China (US $16.07 billion).

 

36. In the year 2001, India offered a grant of five million dollars to Tajikistan to: [I.A.S. (Pre) 2002]

Correct Answer: (a) tackle the drought situation
Note:

 

In May 2001, India offered a grant of US $ 5 million to Tajikistan to tackle the drought situation.

 

37. In the year 2001, Germany approved a $ 32 million credit to India: [I.A.S. (Pre) 2002]

Correct Answer: (b) for Tehri dam project
Note:

In October 2001, Germany granted US $ 32 million credit for Uttarakhand based Tehri dam project.

 

38. Which of the following statement about green bonds is NOT true? [U.P.R.O./A.R.O. (Re-Exam) (Pre) 2016]

Correct Answer: (d) Green bonds are fixed interest loan with short date maturities
Note:

A green bond is a fixed-income instrument designed specially to support specific climate-related or environmental projects. Green bonds typically come with tax incentives to enhance their attractiveness to investors. They are low cost loans with generally long-term maturities. Green bonds are financial market innovation and relatively new asset class, but they are growing rapidly. Green bonds were first introduced by European Investment Bank (EIB) in 2007 as 'Climate Awareness Bond' to fund renewable energy and energy efficiency projects. Afterwards the World Bank issued a labelled 'Green Bond' in 2008.

39. Consider the following statements for 'India Millennium Deposit's Scheme: [U.P.P.C.S. (Mains) 2005]

1. The scheme was launched by the State Bank of India.

2. It was intended for Resident Indians only.

3. The maturity period of the scheme was six years only.

Which of the Statements given above is/are correct?

 

Correct Answer: (d) 1 only
Note:

On 21 October, 2000, 'Indian Millennium Deposit' (IMD) Scheme was launched by the State Bank of India. It offered an 8.5 percent return to depositors and raised $ 5.5 billion. Under that scheme, for five years foreign currency deposits, denominated in US dollar, pound sterling and euro were accepted. The objective of the scheme was to attract foreign exchange through Non-Resident Indians (NRIs).

 

40. Resurgent India Bonds were issued in US dollar, Pound Sterling and: [I.A.S. (Pre) 2000]

Correct Answer: (b) Deutsche Mark
Note:

On 5th August, 1998, the State Bank of India issued the 'Resurgent India Bond' in three different currencies-US dollar, Pound Sterling and Deutsche Mark for a period of five years.