UPSC Prelims 2024 · GS Paper I
Question 53: Economy and Social Development
Consider the following statements in respect of the digital rupee :
- 1.It is a sovereign currency issued by the Reserve Bank of India (RBI) in alignment with its monetary policy.
- 2.It appears as a liability on the RBI's balance sheet.
- 3.It is insured against inflation by its very design.
- 4.It is freely convertible against commercial bank money and cash.
Which of the statements given above are correct ?
AnswerUPSC’s answer is (d).
The digital rupee is the RBI's central bank digital currency: legal tender in digital form issued by the RBI in alignment with its monetary policy, and a liability on the RBI's balance sheet, just like cash. It is convertible at par with cash and commercial bank money. It is not protected from inflation by design; like paper money, it loses purchasing power when prices rise. So statements 1, 2 and 4 are correct.
- 1. It is a sovereign currency issued by the RBI in line with monetary policy.
- 2. Like cash, it is a liability on the RBI's balance sheet.
- 3. It loses value when prices rise, like cash; it is not insured against inflation.
- 4. It can be converted against cash and commercial bank money.
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: It is a sovereign currency issued by the RBI in line with monetary policy.
- Then, if you were sure statement 4 is correct, (a) and (b) go: each of them leaves 4 out.
What you needed to know: It can be converted against cash and commercial bank money.
Only (d) is left. You didn’t need statements 2 or 3.
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) Wrong: it leaves out statement 4, which is correct.
- (b) Wrong: statement 3 is false and statement 2 is true.
- (c) Wrong: it leaves out statement 1, which is correct.
- (d) Right: statements 1, 2 and 4 are correct; the inflation claim is false.
Answer: UPSC’s key. Explanation: written by UPSC Grade, not by UPSC.
Source: UPSC, Civil Services (Preliminary) Examination 2024, General Studies Paper I, Series A. The paper on upsc.gov.in.