UPSC Prelims 2002 · General Studies
Question 137: Economy and Social Development
Consider the following statements: Full convertibility of the rupee may mean
- 1.Its free float with other international currencies.
- 2.Its direct exchange with any other international currency at any prescribed place inside and outside the country.
- 3.It acts just like any other international currency.
Which of these statements are correct?
AnswerThe answer is (d).
Full convertibility, in the sense of the question, means the rupee can float freely against other international currencies (1), be exchanged directly for any other international currency at any prescribed place inside and outside the country (2), and behave like any other international currency (3). It covers capital as well as current account transactions, unlike current account convertibility, which India adopted in 1994. All three statements describe it.
- 1. A free float against other international currencies is part of full convertibility.
- 2. Direct exchange for any currency anywhere is part of full convertibility.
- 3. The rupee would act like any other international currency.
How you could have got this
- If you were sure statement 1 is correct, (c) goes: it leaves 1 out.
What you needed to know: A free float against other international currencies is part of full convertibility.
- Then, if you were sure statement 2 is correct, (b) goes: it leaves 2 out.
What you needed to know: Direct exchange for any currency anywhere is part of full convertibility.
- Then, if you were sure statement 3 is correct, (a) goes: it leaves 3 out.
What you needed to know: The rupee would act like any other international currency.
Only (d) is left. This one needs every statement.
This follows an unofficial answer: UPSC has not published its key for this year, and if that answer is wrong, so is this path.
Which options go is worked out from UPSC’s key and the options, not by a model.
Why each option is right or wrong
- (a) Leaves out statement 3, which is also true.
- (b) Leaves out statement 2, which is also true.
- (c) Leaves out statement 1, which is also true.
- (d) Right: all three are correct.
Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2002, General Studies. UPSC's own paper isn't online; the words are from a published compilation. The paper on upsc.gov.in.