QUESTION 2
India’s dependence on imported crude oil and gold continues to pose challenges to the stability of its external sector. What are the factors contributing to these vulnerabilities and what measures can be suggested to strengthen India’s foreign exchange resilience?
QUESTION 1: The Western Ghats are a global biodiversity hotspot as well as an important economic region. Discuss the challenges of reconciling environmental protection with livelihood and infrastructure needs in India’s ecologically fragile regions.
Relevance: The question integrates biodiversity conservation, sustainable development, environmental governance, climate resilience, and disaster management, all core themes of GS Paper 3. It is important in the context of the ongoing debate over the Western Ghats Ecologically Sensitive Area (ESA) notification and the broader challenge of balancing conservation with development.
Note: This is not a model UPSC answer. It only provides you with a thought process which you may incorporate into the answers.
Introduction:
— The Western Ghats, which spread across six states, are one of the world’s eight “hottest hotspots” for biodiversity. They are the source of several peninsular rivers, govern the Indian monsoon, and provide livelihoods for millions through agriculture, plantations, tourism, hydropower, and forest-based activities.
— However, the extended delay in declaring Ecologically Sensitive Areas (ESAs) demonstrates the difficulty of integrating ecological conservation with development goals.
Body:
You may incorporate some of the following points in your answer:
Challenges in reconciling environmental protection with development
— Restrictions on mining, quarrying, construction, and industrial activity cause worry among farmers, plantation owners, and local people about revenue and employment.
— Expansion of roads, railways, power projects, tourism, and urbanisation frequently intersects with ecologically vulnerable regions, causing tensions between development and conservation.
— The Centre, State governments, environmental groups, and local communities have different goals for the scope and execution of ESA rules.
— Repeated extensions and delays have resulted in regulatory ambiguity, influencing conservation planning and investment decisions.
— Ecological degradation has increased the frequency and severity of landslides, floods, and soil erosion, emphasising the cost of unsustainable growth.
— Reduced habitats and growing human settlements have exacerbated conflicts, threatening both biodiversity conservation and local livelihoods.
Conclusion:
— To reconcile conservation with development, a more nuanced approach is required. A framework based on scientific evaluation, cooperative federalism, community engagement, and sustainable development can conserve the Western Ghats’ ecological integrity while also assuring inclusive economic growth and long-term environmental stability.
(Source: More time for Western Ghats panel as eco-sensitive area deadlock continues, Western Ghats: What is the ESA plan for conservation, why it is necessary and the concerns, Amid Western Ghats landslides, revisiting need for developing early warning systems)
Points to Ponder
Recommendations of the Gadgil Committee and the Kasturirangan Committee
Human-wildlife conflict and changing land-use patterns
Related Previous Year Question
What role do environmental NGOs and activists play in influencing Environmental Impact Assessment (EIA) outcomes for major projects in India? Cite four examples with all important details. (2024)
QUESTION 2: India’s dependence on imported crude oil and gold continues to pose challenges to its external sector stability. What are the factors contributing to these vulnerabilities and what measures can be suggested to strengthen India’s foreign exchange resilience?
Relevance: The question covers key GS 3 economy topics such as the Balance of Payments (BoP), Current Account Deficit (CAD), foreign exchange reserves, energy security, and external sector management. It is relevant amid global economic uncertainty and India’s efforts to enhance macroeconomic resilience through structural reforms and prudent external sector policies.
Note: This is not a model UPSC answer. It only provides you with a thought process which you may incorporate into the answers.
Introduction:
— India’s external sector has remained relatively resilient in recent years, thanks to significant foreign exchange reserves and a robust services industry. However, its reliance on imported crude oil and gold leaves the economy vulnerable to global price shocks, geopolitical disturbances, and currency rate volatility.
— These imports increase the Current Account Deficit (CAD), boost demand for foreign currency, and put pressure on the rupee.
Body:
You may incorporate some of the following points in your answer:
Factors contributing to India’s external sector vulnerabilities
— India imports roughly 90% of its crude oil needs, rendering it exposed to global price surges and geopolitical crises, which dramatically increase import costs.
— India is one of the world’s major gold buyers, despite its minimal local production. Rising household demand causes considerable dollar outflows, widening the CAD.
— Gold is considered as a repository of wealth, particularly during times of economic uncertainty, which leads to persistent import demand rather than financial investments. Conflicts and supply-chain interruptions drive up commodity prices, escalating external payment responsibilities.
— Higher demand for dollars to fund imports weakens the rupee, making future imports more expensive and causing a self-reinforcing cycle.
— Foreign portfolio investment outflows during times of global uncertainty might put additional pressure on foreign exchange reserves and the currency. Overseas travel and remittances through the Liberalised Remittance Scheme (LRS) both contribute to foreign exchange outflows.
Conclusion:
— India’s external sector resilience is dependent not only on maintaining significant foreign currency reserves, but also on structurally decreasing import vulnerabilities and boosting long-term foreign exchange profits. A balanced plan that includes energy transition, productive use of idle gold, export-led growth, and cautious macroeconomic management will strengthen India’s resilience to future external shocks.
(Source: A ‘golden’ fix for India’s forex stress?, Are India’s forex reserves really ‘adequate to provide cushion against external shocks’?, Why PM Modi has asked Indians to reduce spending on gold, petrol, edible oils, Behind PM Modi’s austerity call, dipping foreign exchange reserves, rising gold imports)
Points to Ponder
India’s import dependence on crude oil and gold and its impact on the Current Account Deficit (CAD)
RBI’s role in foreign exchange reserve management and managing external shocks
Related Previous Year Question
Explain how the Fiscal Health Index (FHI) can be used as a tool for assessing the fiscal performance of states in India. In what way would it encourage the states to adopt prudent and sustainable fiscal policies? (2025)
Previous Mains Answer Practice
UPSC Essentials: Mains answer practice — GS 3 (Week 164)
UPSC Essentials: Mains answer practice — GS 3 (Week 163)
UPSC Essentials: Mains answer practice — GS 2 (Week 164)
UPSC Essentials: Mains answer practice — GS 2 (Week 163)
UPSC Essentials: Mains answer practice — GS 1 (Week 163)
UPSC Essentials: Mains answer practice — GS 1 (Week 164)
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Are you preparing for the Civil Services Mains Exam 2026? Attempt a question on the Ecologically Sensitive Areas in today's answer-writing practice. (File Photo) 
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