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:

[UPSC Civil Services Exam – 2019 Prelims]

(a) 1 only

(b) 1 and 3 only

(c) 2 only

(d) 1, 2 and 3


Answer: (b)        

Explanation:

  • A currency crisis involves the sudden and steep decline in the value of a nation’s currency, which causes negative ripple effects throughout the economy.
  • Central banks and governments can intervene to help stabilize a currency by selling off reserves of foreign currency or gold, or by intervening in the forex markets.
  • This decline in value negatively affects an economy by creating instabilities in exchange rates, meaning that one unit of a certain currency no longer buys as much as it used to in another currency.
  • Foreign currency earnings and Remittances contribute to the strengthening of the rupee. Hence Statements 1 and 3 are Correct.
  • Increasing government Expenditure will have no effect on the value of the currency. Hence Statement 2 is Not Correct.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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