Statement: Should India create a huge strategic oil reserve in order to handle difficult situations in the future? Arguments: 1. No. There is no need to block huge amounts of foreign exchange and keep the money idle. 2. Yes. A strategic reserve will help India withstand sudden rises in oil prices due to unforeseen circumstances.

Introduction / Context:
This question deals with a strategic economic and security decision: whether India should invest heavily in a large oil reserve. One argument worries about tying up foreign exchange, while the other stresses protection from future price shocks. Our goal is to judge the strength of each argument, not to choose actual policy. Both sides involve real trade-offs between present cost and future security.

Given Data / Assumptions:

Statement: Should India create a huge oil reserve to face difficult situations in the future?
Argument 1: No. It will block huge amounts of foreign exchange and keep that money idle.
Argument 2: Yes. It will help India withstand shocks of sudden rises in oil prices due to unforeseen circumstances.
We treat the statement as a policy question and the arguments as possible considerations.

Concept / Approach:
A strong argument must present a serious and relevant consequence of the decision. Here, Argument 1 emphasises the economic cost and opportunity cost of locking up foreign exchange reserves in oil stockpiles. Argument 2 emphasises energy security and stability in crises. Both are realistic and often debated in economic and strategic planning, so each can be strong in its own direction.

Step-by-Step Solution:
Evaluate Argument 1: Creating a huge oil reserve requires India to purchase and store large quantities of imported oil, which uses significant foreign exchange. Those funds could alternatively be used for development projects, infrastructure or other investments that yield returns. The argument claims that money locked in oil stockpiles is “idle”, highlighting an opportunity cost. This is a real and relevant economic concern. Therefore, Argument 1 is a reasonably strong argument against creating an excessively large reserve. Evaluate Argument 2: Oil price shocks or supply disruptions due to wars, political instability or natural disasters can severely harm India's economy. A strategic reserve can keep domestic supply stable for some time, preventing sudden spikes in fuel prices and protecting essential services. This is a well-known reason why many countries maintain strategic petroleum reserves. Thus, Argument 2 is also a strong argument in favour of creating such a reserve.

Verification / Alternative check:
Both arguments align with real-world debates: economists and policymakers often balance the cost of tying up capital in stockpiles against the insurance value of having reserves in a crisis. Neither argument is trivial or unrelated. Since they support opposite sides but are individually strong, the exam convention marks this as “either 1 or 2 is strong”.

Why Other Options Are Wrong:
Saying only Argument 1 is strong ignores legitimate national security and price stability concerns.
Claiming only Argument 2 is strong ignores the real burden of locking up scarce foreign exchange.
Stating that neither argument is strong is incorrect because both reflect serious policy considerations.
Saying both are simultaneously strong (as a separate code) does not match the pattern for yes/no arguments where “either” is used for two opposing strong points.

Common Pitfalls:
Students sometimes think only one argument can be strong in these questions. They may automatically dismiss cost-based concerns or, on the other hand, ignore long-term security benefits. Real policy decisions usually involve balancing such competing strong arguments. Recognising that both sides can present valid points is essential for mastering statement-and-argument problems.

Final Answer:
Both arguments 1 and 2 are individually strong but point in opposite directions, so the correct choice is Either 1 or 2 is strong.