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UPSC 2019: In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? 1. The foreign currency earnings of India's IT sector 2. Increasing the government expenditure 3. Remittances from Indians abroad Select the correct answer using the code given below.
(a)1 only
(b)1 and 3 only
(c)2 only
(d)1, 2 and 3
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Not attemptedCorrect Answer: (b) 1 and 3 only
Foreign-currency earnings of the IT/ITES export sector (statement 1) and inward remittances from Indians working abroad (statement 3) both add hard currency to India’s forex reserves and therefore lessen the probability of a balance-of-payments or currency crisis. Higher government expenditure (statement 2) has no direct bearing on forex reserves and can even widen the current-account or fiscal deficit, so it does not mitigate currency risk. Hence only 1 and 3 are correct. ([edukemy.com](https://edukemy.com/blog/upsc-prelims-2019-question-65/?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2019 Indian Economy question?▼
The correct answer is option (b): 1 and 3 only. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this External Sector & Balance Of Payments question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2019, GS Paper 1, as Question 65. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions from External Sector & Balance Of Payments (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.