Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:
Assertion (A): India is a popular outsourcing location, which has resulted in a rise in foreign currency reserves.
Reason (R): India's population growth rate makes the country labour cost efficient.
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: Both Assertion and Reason are true, and Reason (R) is the correct explanation of Assertion (A).
Assertion (A) is true: India has indeed become a popular outsourcing destination for various industries, such as IT, BPO, and pharmaceuticals. This has led to a significant influx of foreign currency into the country, boosting its foreign exchange reserves.
Reason (R) is true: India's large and growing population, combined with a relatively young workforce, makes it a cost-effective destination for outsourcing. The lower labor costs compared to many developed countries are a major attraction for foreign companies.
Therefore, Reason (R) accurately explains why India is a popular outsourcing location and why it has resulted in a rise in foreign currency reserves.