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All questions of External Sector in India for BPSC (Bihar) Exam

Consider the following statements:
Statement-I:
India's forex reserves stood at USD 562.7 billion as of December 2022, covering 93 months of imports, indicating their critical role in ensuring economic stability.
Statement-II:
India's external debt in September 2022 totaled USD 610.5 billion, equivalent to 19.2% of its GDP, showcasing a prudent management approach post-reforms.
Which one of the following is correct in respect of the above statements?
  • a)
    Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • b)
    Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • c)
    Statement-I is correct, but Statement-II is incorrect
  • d)
    Statement-I is incorrect, but Statement-II is correct
Correct answer is option 'A'. Can you explain this answer?

Valor Academy answered

Statement-I correctly highlights the significant amount of India's forex reserves as of December 2022, underlining their importance in ensuring economic stability. The statement also accurately mentions that these reserves are sufficient to cover 93 months of imports, reflecting their critical role in safeguarding against external shocks and crises.
Statement-II provides an accurate representation of India's external debt situation in September 2022, detailing the total amount of external debt and its percentage relative to the GDP. By showcasing a prudent management approach post-reforms, this statement aligns with the data presented in the provided content.
Therefore, both statements are factually correct, and Statement-II explains the importance and implications of India's forex reserves highlighted in Statement-I. Hence, option (a) is the correct answer.

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