Read the given paragraph carefully and answer the following questions.

Government Budget

The Indian economy is on a strong wicket and stable footing, demonstrating resilience in the face of geopolitical challenges. The Indian economy has consolidated its post-Covid recovery with policymakers - fiscal and monetary ensuring economic and financial stability. Nonetheless, change is the only constant for a country with high growth aspirations. For the recovery to be sustained, there has to be heavy lifting on the domestic front because the environment has become extraordinarily difficult to reach agreements on key global issues such as trade, investment and climate. The headline inflation rate is largely under control, although the inflation rate for some specific food items is elevated. The trade deficit was lower in FY24 than in FY23, and the current account deficit for the year is around 0.7% of GDP. In fact, the current account registered a surplus in the last quarter of the financial year. Foreign exchange reserves are ample. Public investment has sustained capital formation in the last several years even as the private sector shed its balance sheet blues and began investing in FY22. Now, it has to receive the baton from the public sector and sustain the investment momentum in the economy. The signs are encouraging. National income data show that non-financial private-sector capital formation, measured in current prices, expanded vigorously.

Which combination among the following represents a Geopolitical challenge in the economy.

A. Rise in inflation due to war and other natural calamities.
B. Fluctuation in economic benchmarks due to unstable government.
C. Impacting Balance of Payment due to economic sanctions on a country.
D. Failure of a firm led to a reduction in profit making.

(A), (B) and (C) only

The correct answer is Option (3) → (A), (B) and (C) only

Geopolitical challenges refer to the effects of political tensions, conflicts, or instability between or within countries on economic performance.

• (A) Rise in inflation due to war and other natural calamities: True. Geopolitical events like wars can disrupt supply chains and commodity markets, leading to inflation. Natural calamities, while not strictly geopolitical, are often cited alongside them as external shocks to the economy.

• (B) Fluctuation in economic benchmarks due to unstable government: True. Political instability within a country, a core geopolitical factor, directly impacts economic policy and investor confidence, causing fluctuations in economic benchmarks.

• (C) Impacting Balance of Payment due to economic sanctions on a country: True. Sanctions are a tool of foreign policy, a key element of geopolitics. They directly affect a country's ability to trade and make international payments, thus impacting its Balance of Payments.

• (D) Failure of a firm led to a reduction in profit making: False. This is a microeconomic issue related to a specific business. While it can have broader economic consequences, it is not considered a geopolitical challenge.