Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

EduRev

All Courses

Explore Courses UPSC Exam UPSC Test Series Free Notes EduRev Infinity

Open App

UPSC Exam > UPSC Questions > Consider the following statements regarding R...

Join the Discussion on the App

Consider the following statements regarding Rupee Appreciation.

Rupee can appreciate because of strong foreign portfolio investments into the country.
Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.

Which of the above statements is/are correct?

a)
1 only
b)
2 only
c)
Both 1 and 2
d)
Neither 1 nor 2

Correct answer is option 'C'. Can you explain this answer?

FREE This question is part of

Test: Indian Economy -7

Attempt Test

Attempt this Test

Most Upvoted Answer

Consider the following statements regarding Rupee Appreciation. Rupee ...

Rupee Appreciation and its Impact on the Indian Economy

Statement 1: Rupee can appreciate because of strong foreign portfolio investments into the country.

Foreign portfolio investments refer to the investments made by foreign investors in the financial markets of a country, such as stocks, bonds, and other securities. When there is a strong inflow of foreign portfolio investments into a country, it leads to an increase in the demand for the country's currency, which can result in the appreciation of the currency. This is because foreign investors need to buy the local currency in order to invest in the financial markets.

Statement 2: Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.

When the rupee appreciates, it becomes stronger in comparison to other currencies. This means that it takes fewer rupees to buy a unit of foreign currency. As a result, imports become cheaper while exports become more expensive. This can negatively impact the domestic manufacturing industry in the following ways:

Increased competition: Cheaper imports can lead to increased competition for domestic manufacturers, as foreign goods become more affordable for consumers. This can result in a decrease in demand for domestically produced goods.

Loss of competitiveness: When the domestic currency appreciates, it makes exports more expensive for foreign buyers. This can lead to a decrease in demand for domestically produced goods in international markets, affecting the competitiveness of the domestic manufacturing industry.

Job losses: A decrease in demand for domestically produced goods can lead to a decline in production and, subsequently, job losses in the manufacturing sector.

Conclusion

Both statements are correct. Strong foreign portfolio investments can lead to rupee appreciation, as foreign investors need to buy the local currency to invest in the financial markets. However, avoiding rupee appreciation can be beneficial for the domestic manufacturing industry, as it prevents increased competition, loss of competitiveness, and job losses. Therefore, both statements contribute to a comprehensive understanding of the impact of rupee appreciation on the Indian economy.

Answered by Notes Wala · View profile

Attention UPSC Students!

To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.

Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

History for UPSC CSE

Lucent for GK

Indian Polity for UPSC CSE

View all answers Start learning for free

< Previous Question Next Question >

Explore Courses for UPSC exam

Similar UPSC Doubts

Consider the following statements regarding Foreign Portfolio Investments (FPIs): They are regulated by the Securities and Exchange Board of India (SEBI). They have a longer time frame for investment return than Foreign Direct Investments (FDIs).Which of the statements given above is/are correct?

View answer

With reference to the production-linked incentive (PLI) scheme for manufacturing of mobile phones, consider the following statements:1. PLI schemes for all sectors that have been announced since April last year envisage incentives on achievement of a minimum threshold of cumulative incremental investment and incremental sales of manufactured goods net of taxes.2. Since the government notified the PLI for mobile manufacturing on April 1 last year, FY21 was considered as the base year for the calculation of incremental investments and sales, and therefore the incentives to be given to companies.Which of the statements given above is/are correct?

View answer

Consider the following statements regarding the Bilateral investment treaty (BIT). A bilateral investment treaty (BIT) is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in another state. BITs must compulsorily protect the environment, labour rights, social provisions or natural resources in the country where investments are made. They allow for an alternative dispute resolution mechanism under the auspices of the International Centre for Settlement of Investment Disputes (ICSID).Which of the above statements is/are correct?

View answer

With reference to National Manufacturing Policy 2011, consider the following statements:1. The policy is based on the principle of industrial growth in partnership with the states.2. National Investment and Manufacturing Zones (NIMZs) are an important instrument of the policy.Which of the above statements is/are correct?

View answer

Consider the following statements regarding the Annual Survey of Industries:1. It provides a comprehensive and reliable source of manufacturing sector data with industry-specific details of production, investment, employment and costs.2. It covers both the organized and unorganized manufacturing sector enterprises.3. It is conducted annually by the National Statistical Office.Which of the statements given above are correct?

View answer

Top Courses for UPSCView all

Current Affairs & Hindu Analysis: Daily, Weekly & Monthly

History for UPSC CSE

Lucent for GK

Indian Polity for UPSC CSE

CSAT Preparation

Top Courses for UPSC

View all

Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?

Share with a Friend

Answer this doubt

Question Description
Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?.

Solutions for Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC. Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.

Here you can find the meaning of Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer?, a detailed solution for Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? has been provided alongside types of Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice Consider the following statements regarding Rupee Appreciation. Rupee can appreciate because of strong foreign portfolio investments into the country. Avoiding the appreciation of the rupee can strengthen the domestic manufacturing industry.Which of the above statements is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'C'. Can you explain this answer? tests, examples and also practice UPSC tests.

Explore Courses for UPSC exam