Consider the following statements : I. Most of India’s external debt is owed by governmental entities. II. All of India’s external debt is denominated in US dollars. Which of the statements given above is/are correct ?

Both statements are false, so the answer is D. The core concept is the composition of India's external debt, which is tracked by the RBI under the External Debt Management framework and reported in its quarterly External Debt Status reports.

• Statement 1 is wrong. Government (sovereign) debt is only a minority share of India's external debt, roughly a fifth in the period around 2019. The bulk is non-government debt: corporate borrowing, commercial loans to banks and NBFCs, trade credit, and NRI deposits.
• Statement 2 is wrong. External debt is multi-currency. US dollar borrowings form the largest share, but there are significant holdings in yen, SDR, euro and other currencies. NRI deposits are even held in rupee terms.

The Mains angle is debt sustainability: the share of short-term debt, currency mismatch risk and the reliance on private borrowing are standard themes in economic analysis. The currency and government-share figures shift every quarter, so always check the latest RBI data for facts that may have changed since 2019.

Trap: candidates assume external debt means sovereign borrowing from the IMF, World Bank and ADB, and then assume the dollar is the only currency. Both assumptions are wrong.