GyanGramIn the context of India, which of the following factors is/are contributor/contributors to reducing the risk…
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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
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• Correct Answer: B
• IT sector foreign currency earnings and remittances from Indians abroad boost forex reserves and improve the current account balance.
• Increasing government expenditure widens fiscal deficit and may trigger inflation, potentially weakening the currency.
• Statement 2 is incorrect; statements 1 and 3 are correct.
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