India's foreign exchange reserve at the end of December, 2024 was:
- (a)USD 604.3 billion
- (b)USD 640.3 billion
- (c)USD 603.4 billion
- (d)USD 630.4 billion
Correct — B, USD 640.3 billion. The Economic Survey 2024-25 records India's foreign exchange reserves at USD 640.3 billion as at end-December 2024, an import cover of about 10.9 months and enough to cover roughly 90 per cent of the country's external debt. The figure comes after a sharp swing during 2024: reserves had climbed to an all-time high of about USD 705 billion in late September 2024 and then fell over October-December as the rupee came under pressure and the Reserve Bank sold dollars to smooth the move.
- (a)USD 604.3 billion — A digit-shuffle of 640.3 — the 4 and the 0 exchanged. Not the end-December 2024 figure reported by the Economic Survey.
- (c)USD 603.4 billion — Another rearrangement of the same three digits; no official release puts reserves at this level at end-December 2024.
- (d)USD 630.4 billion — Close enough to look right but still a shuffle. The Survey's figure is 640.3, not 630.4 — a ten-billion-dollar decoy for anyone recalling the number loosely.
Foreign exchange reserves are the external assets held by the Reserve Bank of India and reported weekly. They have four components: foreign currency assets (by far the largest), gold, Special Drawing Rights allotted by the IMF, and India's Reserve Tranche Position at the IMF. Reserves are not government income; they are a buffer that lets the country pay for imports, service external debt and absorb capital-flow shocks, and they give the RBI room to steady the rupee. Their adequacy is judged not in absolute dollars but in ratios — months of import cover, and reserves as a share of external debt.
The Economic Survey reports these ratios precisely because the headline number alone means little: USD 640.3 billion translated into about 10.9 months of imports and about 90 per cent cover of external debt, both comfortable by international norms. For the exam, treat the date qualifier as part of the answer — reserves moved from roughly USD 705 billion in late September 2024 to USD 640.3 billion at end-December 2024, so the same question set at a different month has a different correct option. And when all four options are digit-shuffles, only the memorised figure separates them.
- End-December 2024: USD 640.3 billion, as reported in the Economic Survey 2024-25
- That level gave an import cover of about 10.9 months and covered roughly 90 per cent of India's external debt
- Reserves touched an all-time high of about USD 705 billion in late September 2024 before falling through the December quarter
- Four components: foreign currency assets, gold, Special Drawing Rights (SDRs), and the Reserve Tranche Position with the IMF
- The reserves are held and managed by the Reserve Bank of India and are published weekly in its Weekly Statistical Supplement
- Confusing foreign exchange reserves with external debt or with the exchange rate itself — three different numbers that appear in the same chapter of the Survey
- Ignoring the date: reserves are a weekly series, and September 2024 and December 2024 give different answers
- Assuming reserves belong to the government's budget — they are RBI-held external assets, not revenue
MPPSC quotes the Economic Survey figure and shuffles the digits; UPSC asks the concept — what constitutes the current account, what reserves signify, or whether a stated reserve level for a given year is correct. Carry the number with its two ratios (10.9 months of imports, ~90 per cent of external debt) and you can answer either style.
Consider the following statements : 1. During the year 2004, India’s foreign exchange reserves did not exceed the 125 billion U.S. Dollar mark 2. The series of index numbers of wholesale prices introduced from April, 2000 has the year 1993-94 as base year. 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(b) 2 only — statement 1 is wrong because India's reserves did cross the USD 125 billion mark during 2004.
The same idea tested from the UPSC side — knowing the level of India's foreign exchange reserves at a stated date, here as a true/false statement rather than a figure choice.
What was the proportion of external debt in the Gross Domestic Product (GDP) at the end of September 2023?
- (a) 18.6%
- (b) 26.3%
- (c) 15.8%
- (d) 30.1%
Answer(a) 18.6%
MPPSC's standing habit in this area — an external-sector indicator lifted from the Economic Survey, quoted for a precise month-end, with numerically close options.
- practice — not a real PYQ
Which one of the following is NOT a component of India's foreign exchange reserves as reported by the Reserve Bank of India?
- (a)Foreign currency assets
- (b)Gold
- (c)Special Drawing Rights
- (d)External commercial borrowings
Answer(d) External commercial borrowings — a form of external debt, not a reserve asset. The four components are foreign currency assets, gold, SDRs and the Reserve Tranche Position.
- practice — not a real PYQ
The 'import cover' of foreign exchange reserves refers to:
- (a)The share of imports financed by export earnings
- (b)The number of months of imports that the reserves can finance
- (c)The customs duty collected on imports
- (d)The proportion of imports covered by trade agreements
Answer(b) The number of months of imports that the reserves can finance — about 10.9 months at end-December 2024.