Correct Option
Option (B):
India's foreign exchange reserves are primarily composed of four elements:
- Foreign Currency Assets (FCA): These assets are held in major international currencies such as the US dollar, Euro, and Japanese Yen.
- Gold holdings of the Reserve Bank of India (RBI).
- Special Drawing Rights (SDRs): An international reserve asset created and maintained by the International Monetary Fund (IMF).
- Reserve Position in the IMF: This represents a portion of a member country's quota contribution to the IMF that can be drawn upon.
Option (B) accurately lists Foreign Currency Assets, gold holdings of the RBI, and SDRs, all of which are integral components of India's foreign exchange reserves.
Incorrect Options
Options (A), (C), and (D) are incorrect because they include "loans from foreign countries" or "loans from the World Bank." Loans, whether obtained from foreign nations or international financial institutions like the World Bank, represent liabilities or borrowings for India. Foreign exchange reserves, by definition, are external assets held by the central bank or monetary authority to manage the balance of payments, influence exchange rates, and maintain confidence in the economy. Liabilities are not considered components of these reserves.