Consider the following statements:

1. Most of India’s external debt is owed by governmental entities.

2. All of India’s external debt is denominated in US dollars.

Which of the statements given above is/are correct?

The correct option is Neither 1 nor 2.

Let us analyze both statements step-by-step:

Analysis of Statement 1:

"Most of India’s external debt is owed by governmental entities."

This statement is incorrect. In India's total external debt, non-government debt (which includes Commercial Borrowings, Non-Resident Indian deposits, and short-term trade credits) constitutes the largest share (usually around 75-80% or more). Government external debt accounts for a significantly smaller fraction of the total external debt.

Analysis of Statement 2:

"All of India’s external debt is denominated in US dollars."

This statement is incorrect. While the US dollar is the largest component of India’s external debt (accounting for more than half), it is not the only currency. India’s external debt is multi-currency denominated, which includes the Indian Rupee (INR), Special Drawing Rights (SDR), Japanese Yen (JPY), Euro (EUR), and other major currencies.

Since both Statement 1 and Statement 2 are incorrect, the appropriate choice is Neither 1 nor 2.