Correct Option (b)
The passage explicitly states that the financial markets in emerging market economies, including India, experienced adverse impacts due to specific global factors. These factors are:
- "Weak global economic prospects" (Statement 1).
- "Continuing uncertainties in the international financial markets" (Statement 2).
- "Sovereign risk concerns particularly in the Euro area" (Statement 3), with the contagion of Greece's sovereign debt problem affecting India.
Therefore, statements 1, 2, and 3 are directly supported by the text as causes for the adverse impact.
Incorrect Options:
Statement 4, "Bad monsoons and the resultant crop loss," is not mentioned anywhere in the provided passage as a factor contributing to the adverse impact on financial markets in emerging economies. Since the question requires answers to be based solely on the passage, this statement is incorrect.
Options (a), (c), and (d) are incorrect because they either omit one or more of the correctly identified factors (1, 2, and 3) or include the unsupported factor (4).