UPSC Prelims 2000 · General Studies
Question 29: Economy and Social Development
Consider the following statements: The Indian rupee is fully convertible I. In respect of Current Account of Balance of Payment. II. In respect of Capital Account of Balance of Payment. III. Into gold. Which of these statements is/are correct?
AnswerThe answer is (a).
India accepted Article VIII of the IMF in August 1994, making the rupee fully convertible on the current account (trade, services, remittances). The capital account was kept only partly open, with limits on many capital flows, so it is not fully convertible. The rupee has never been convertible into gold. Remember: current account yes, capital account partial, gold no.
- I. The rupee is fully convertible on the current account, as since August 1994.
- II. The capital account is only partly convertible.
- III. The rupee cannot be converted into gold.
Why each option is right or wrong
- (a) Right: only the current account is fully convertible.
- (b) The rupee is not convertible into gold, so III is false.
- (c) The capital account is not fully convertible, so II is false.
- (d) II and III are false, so this is wrong.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2000, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.