Acme Ai
A
अ
GS Paper IUPSC Prelims 2002
Fiscal Policy & Public Finance
Question No. 206Interactive Test Mode
00:00
+2-0.66

Q206. A country is said to be a debt trap if:

A country is said to be a debt trap if:

Select the correct option below (or cross out options to eliminate)
PrevNext Question

Official Answer Key & Detailed Solution

3D PYQ Realm

Ready to check the official UPSC Answer Key?

Click any option above to test yourself under exam conditions, or reveal the explanation directly.

Official UPSC Answer KeyUPSC Prelims 2002 • Indian Economy

Correct Answer: Option (A) — it has to borrow to make interest payments on outstanding loans

Concept & Option Breakdown

Standard Reference Verified

A debt trap is a situation where a sovereign or entity is unable to service its existing debt obligations from its ordinary revenues and is forced to borrow new debt simply to pay the interest (debt servicing) on previous loans, leading to an unsustainable, compounding cycle of indebtedness.

Elimination Heuristic & Exam Approach

A 'trap' is defined by a self-reinforcing vicious cycle — borrowing fresh debt to service past interest payments perfectly captures this cycle.

Reviewed by Avinash Sir & Acme AI Research Team

Practice Full-Length & Sectional Prelims Mocks on this Interface

50 simulated tests in the APT Prelims Test Series (₹1,493) or 1-on-1 Mentorship with Avinash Sir.

1-on-1 MentorshipOpen Test Platform

Question Specifications & Syllabus Mapping

Examination & YearUPSC Civil Services Preliminary Examination 2002 (Q206)
Paper & Marking SchemeGS Paper I • 2 Marks (-0.66 Negative for incorrect response)
Syllabus Subject & TopicIndian Economy → Fiscal Policy & Public Finance
Official Answer KeyOption (A) — (a) it has to borrow to make interest payments on outstanding loans

Related & Repeated Prelims PYQs (2)

Questions from other UPSC Prelims years testing the same or closely linked concept.

View Cluster in 3D Graph
2011 • Q27882% Match

Regarding the International Monetary Fund, which one of the following statements is correct?

Indian Economy • Indian Economic Planning & GrowthSolve
2020 • Q12681% Match

“Gold Tranche” (Reserve Tranche) refers to:

Indian Economy • Indian Economic Planning & GrowthSolve

More PYQs from Indian Economy (Fiscal Policy & Public Finance)

Master the Indian Economy syllabus cluster by practicing these related previous year questions.

View All Indian Economy PYQs
2001 • Q137Fiscal Policy & Public Finance

Consider the following: 1. Market borrowing 2. Treasury bills 3. Special securities issued to RBI Which of these is/are components(s) of internal debt

Indian EconomyPractice
2024 • Q1Indian Economic Planning & Growth

With reference to the sectors of the Indian economy, consider the following pairs: | Economic activity | Sector | | :--- | :--- | | 1. Storage of agr

Indian EconomyPractice
2024 • Q2Indian Economic Planning & Growth

With reference to physical capital in Indian economy, consider the following pairs: | Items | Category | | :--- | :--- | | 1. Farmer’s plough | Worki

Indian EconomyPractice
2024 • Q32Agriculture & Rural Economy

With reference to the Digital India Land Records Modernisation Programme, consider the following statements: 1. To implement the scheme, the Central G

Indian EconomyPractice
2024 • Q68Industry & Infrastructure

With reference to Corporate Social Responsibility (CSR) rules in India, consider the following statements: 1. CSR rules specify that expenditures that

Indian EconomyPractice
2024 • Q123Indian Economic Planning & Growth

With reference to the Indian economy, “Collateral Borrowing and Lending Obligations” are the instruments of:

Indian EconomyPractice
2024 • Q124Indian Economic Planning & Growth

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 alignmen

Indian EconomyPractice
2024 • Q138Banking & Financial System

With reference to the rule/rules imposed by the Reserve Bank of India while treating foreign banks, consider the following statements: 1. There is no

Indian EconomyPractice

Frequently Asked Questions — UPSC Prelims 2002 Q206

What is the official answer for UPSC Prelims 2002 GS Paper I Question 206 (Indian Economy)?

The official UPSC answer key for this 2002 Indian Economy (Fiscal Policy & Public Finance) question is Option (A): "(a) it has to borrow to make interest payments on outstanding loans". Correct attempts carry 2 Marks with -0.66 Negative penalty for wrong answers.

Which UPSC Prelims syllabus topic does this 2002 question belong to?

This question belongs to GS Paper I under the subject "Indian Economy" and micro-topic "Fiscal Policy & Public Finance". You can explore all repeated questions from Fiscal Policy & Public Finance in Acme AI's 3D Prelims PYQ Realm or practice 50 full-length and sectional tests in the APT Prelims Test Series.

How can I solve this Fiscal Policy & Public Finance UPSC Prelims question using option elimination?

A 'trap' is defined by a selfreinforcing vicious cycle — borrowing fresh debt to service past interest payments perfectly captures this cycle.

Beyond Previous Year Questions

Structured Prelims Practice & Mentorship

Pair previous year question analysis with full-length simulated mock tests and 1-on-1 faculty guidance.

APT 2027 • 50 Prelims Tests17% OFF

Acme Prelims Test Series (APT)

Built to eliminate 1/3rd negative marking losses and 50–50 option traps through structured simulation and NCERT-backed keys.

  • 50 High-Yield Tests: Subject Sectionals, Current Affairs, CSAT Paper II & Full-Length Simulators
  • 1/3rd Penalty & Trap Analytics: Identify whether marks are lost to over-attempting or conceptual gaps
  • Option-by-Option NCERT Keys: Detailed distractor analysis and elimination logic for every question
  • Custom PDF-to-Mock Generator: Convert your revision notes or current affairs PDFs into practice tests
Complete 50-Test Package
₹1,493₹1,799• Valid till Prelims 2027
Explore APT Test SeriesTry Free Mock
1-on-1 Personal MentorshipCapped at 10 Seats

1-on-1 UPSC Mentorship with Avinash Sir

Weekly 1-on-1 strategy reviews, daily study accountability, and personalized MCQ attempt audits with an experienced UPSC mentor.

  • Weekly 1-on-1 Sessions: Direct mentorship with Avinash Sir (Former Plutus IAS Mentor, UPSC & UPPCS Mains Written)
  • APT 50-Test Series Included: Full Prelims GS1 & CSAT test series bundled at no additional cost
  • Mock Attempt & Elimination Audit: Question-by-question review to calibrate your risk and attempt accuracy
  • Prelims & Integrated Tracks: Available as dedicated Prelims mentorship or end-to-end Prelims + Mains guidance
Prelims & Integrated Tracks
17% OFF• Includes APT 50-Test Series
Explore 1-on-1 MentorshipCompare Tracks
Previous QuestionConsider the following: 1. Currency with the public 2. Demand deposits with banks 3. Time deposits with banks Which of these are included in Broad Money(M3) in India ?
Next QuestionWhich one of the following submitted in 1875 a petition to the House of Commons demanding India’s direct representation in the British parliament?