External sector & international economic bodies

Answer: (c) World Economic Forum

The Global Competitiveness Report, built around the Global Competitiveness Index (GCI), is brought out by the World Economic Forum, the Geneva-based foundation. Its 2019 edition reviewed 141 economies.

• ✓ (c) The GCI and the report that presents it are the World Economic Forum's; the 2019 edition assessed 141 countries.
• ✗ (d) The World Bank's country ranking of that period was the Doing Business Report, a different index on business regulation (India was 63rd of 190 in the 2020 edition).

Remember · Global Competitiveness Report / Index = World Economic Forum. Doing Business Report = World Bank (a separate ranking).

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (b) India

India has been the world's largest rice exporter every year since 2012, so it was the largest in the five years before the 2019 exam. China grows the most rice but is a minor exporter; Vietnam and Myanmar (Burma) rank below India.

• ✓ (b) USDA's Economic Research Service records India as the largest global rice exporter since 2012, shipping more than the next three largest exporters combined in recent years.
• ✗ (d) Vietnam is among the next largest exporters, after Thailand, but behind India.
• ✗ (a) China is the largest rice producer, but most of its crop is eaten at home and it exports much less than India.
• ✗ (c) Myanmar (Burma) is a smaller exporter than India, Thailand, Vietnam and Pakistan.

Remember · India has been the world's top rice exporter since 2012; then Thailand, Vietnam, Pakistan. China is the top producer but not a leading exporter.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (d) Neither 1 nor 2

Neither statement is correct. At end-March 2019 the Government's own (sovereign) share was only 19.1% of India's external debt, so most of it is owed by non-government borrowers, and US dollar debt was about half (50.5%), with a large rupee-denominated share.

• ✗ 1. The Ministry of Finance's status report gives the Government (sovereign) share as 19.1% of total external debt at end-March 2019. The rest is owed by banks, public-sector firms and private companies, including NRI deposits.
• ✗ 2. US dollar debt was the largest currency component at 50.5%, but rupee-denominated debt made up 35.7% and the rest was in yen, SDR, euro and other currencies.
• • Since then At end-March 2025 the US dollar share of external debt was 54.2%, still not the whole; rupee, yen, SDR and euro debt remain (Ministry of Finance status report 2024-25).

Remember · India's external debt is mostly non-government (government share about one-fifth) and only about half is in US dollars; the rest is in rupees, yen, SDR, euro and others.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (b) 1 and 3 only

IT export earnings and remittances from Indians abroad both bring foreign currency into India, which helps pay for imports and supports the rupee, so they lower the risk of a currency crisis. Higher government spending does not earn any foreign exchange and tends to push up demand and prices, so it does not reduce that risk.

• ✓ 1. NCERT notes that India is earning large foreign exchange through the export of information technology. RBI's balance of payments releases likewise credit software services exports for rising services receipts.
• ✓ 3. Private transfer receipts, mainly remittances by Indians employed overseas, are a large steady inflow of foreign currency in the balance of payments (US$ 27.4 billion in July-September 2022).
• ✗ 2. Extra government spending raises aggregate demand and is criticised as inflationary (NCERT). It adds no foreign-currency receipts, so it is not a factor that reduces currency-crisis risk.

Remember · Stable foreign-exchange inflows, such as IT and services exports and remittances, protect the currency; expansionary government spending brings no such inflow.

📘 Read it in NCERT: Class 10 Contemporary India – II, Ch 7 (practise this chapter) · Class 12 Introductory Macroeconomics, Ch 5 (practise this chapter)

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (d) Participatory Note

A Participatory Note (P-Note, now officially called an Offshore Derivative Instrument) is what a registered foreign portfolio investor issues abroad to an overseas investor who wants exposure to Indian securities without registering with SEBI. The FPI keeps the securities; the economic benefit passes to the note-holder.

• ✓ (d) SEBI describes ODIs (the erstwhile P-Notes) as derivative instruments issued overseas by FPIs against securities held in India; the FPI stays the owner of the underlying securities while the investor gets the economic benefit.
• ✗ (a) A Certificate of Deposit is a deposit-type instrument issued by banks to raise funds, not an instrument through which a foreign investor buys exposure to Indian shares.
• ✗ (b) Commercial Paper is a short-term borrowing instrument issued by companies, not a route for foreign investors to hold Indian equities indirectly.

Remember · P-Notes (Offshore Derivative Instruments) are issued abroad by SEBI-registered FPIs to foreign investors who avoid direct registration; the FPI holds the underlying Indian securities.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (a) 1 only

Only statement 1 is correct. AIIB already had 84 members by the end of 2017, so it had more than 80 members. India is the second-largest shareholder after China, and AIIB has many non-Asian (non-regional) members.

• ✓ 1. AIIB approved 27 new members in 2017, bringing the total to 84. It has kept growing and now has 111 approved members.
• ✗ 2. China is the largest shareholder, with more than 25 per cent of the voting power. India is the second-largest shareholder, followed by Russia.
• ✗ 3. AIIB has both regional (Asian) and non-regional members. Of the 84 members at the end of 2017, 48 were regional and 36 non-regional, so many members are from outside Asia.

Remember · AIIB (headquarters Beijing, operational since 2016) has regional and non-regional members; China is the largest shareholder and India the second-largest.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (a) Maintenance of law and order

Maintenance of law and order is not one of the ten areas the World Bank's Doing Business ranking measured. Paying taxes, registering property and dealing with construction permits are all among the ten.

• ✓ (a) The ten areas in the ease of doing business score were: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Law and order is not on the list.
• ✗ (b) Paying taxes is one of the ten areas.
• ✗ (c) Registering property is one of the ten areas.
• ✗ (d) Dealing with construction permits is one of the ten areas.
• • Since then After data irregularities were found in Doing Business 2018 and 2020, the World Bank Group discontinued the Doing Business report in September 2021; no new rankings have been published.

Remember · Doing Business had ten indicators (starting a business to resolving insolvency); law and order was never one. The World Bank discontinued the report in September 2021.

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Answer: (a) 1 only

PPP exchange rates are worked out by comparing what the same goods and services cost in different countries, so statement 1 is correct. In PPP terms India was the third largest economy, behind China and the USA, not the sixth, so statement 2 is wrong.

• ✓ 1. The World Bank's International Comparison Program collects prices of the same goods and services in many economies and uses them to compute PPPs, which convert a common basket of goods into 'international dollars'.
• ✗ 2. In the 2017 ICP round India's GDP in PPP terms was $8,051 billion, 6.7 per cent of the world total and third after China (16.4 per cent) and the USA (16.3 per cent). India has held third place in PPP terms since 2008, when it passed Japan.

Remember · PPP compares the price of the same basket across countries. On a PPP basis India has been the world's third largest economy since 2008.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error

Answer: (d) Vegetable oils

Vegetable (edible) oils are India's largest agricultural import by value. Imports of vegetable oils bridge the gap between domestic demand and supply; spices, fresh fruits and pulses all account for a smaller share.

• ✓ (d) The Ministry of Agriculture names vegetable oils as the major agricultural import. Official import data for April-March 2014 to 2017 (Lok Sabha reply, Government of India open data) show vegetable oils at the top every year, well above pulses, fresh fruits and spices; and in 2019-20, of agricultural imports worth USD 19.91 billion, vegetable oils took the largest share, 48 per cent.
• ✗ (c) Pulses are among the major agri imports, but vegetable oils hold the largest share by value.
• ✗ (b) Fresh fruits are named among the major agri imports, but vegetable oils hold the largest share by value.
• ✗ (a) Spices are named among the major agri imports, but vegetable oils hold the largest share by value.

Remember · Vegetable (edible) oils are India's largest agricultural import by value (48 per cent of agri imports in 2019-20); pulses, fresh fruits, cashew nuts and spices are other major imports.

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 1 Oct 2026 (how we verify). Permalink · Report an error

Answer: (d) Following an expansionary monetary policy

An expansionary monetary policy lowers interest rates, which makes holding rupee assets less attractive and tends to push the rupee down further. The other three steps reduce the demand for dollars or bring foreign money in, so they support the rupee.

• ✓ (d) NCERT explains that a rise in interest rates at home often leads to an appreciation of the domestic currency, so a policy of lower rates does the opposite and would not stop the slide.
• ✗ (a) Fewer imports and more exports narrow the trade gap. In September 2018 the Government raised customs duty on 19 non-essential items to narrow the current account deficit.
• ✗ (b) Masala bonds are rupee bonds sold abroad, so they bring foreign money in. In September 2018 the Government exempted from tax the interest paid on masala bonds issued between 17 September 2018 and 31 March 2019, to raise foreign exchange inflows.
• ✗ (c) Easier external commercial borrowing lets Indian firms raise foreign money more freely. The RBI liberalised the ECB and rupee-bond framework in January 2019.

Remember · To stop the rupee sliding, the authorities reduce dollar demand and attract foreign inflows (curb imports, ease ECB, masala bonds); cutting interest rates makes it worse.

📘 Read it in NCERT: Class 12 Introductory Macroeconomics, Ch 6 (practise this chapter)

Question and answer: UPSC's official GS Paper I (2019, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). Permalink · Report an error