The correct option is "Neither 1 nor 2" because, firstly, while a significant portion of India’s external debt is held by the government, a substantial amount is also owed by private entities and non-governmental organizations, indicating that not most of it is purely governmental. Secondly, India’s external debt is denominated in multiple currencies, including the US dollar, euro, and Japanese yen, which highlights that it is not exclusively in US dollars. Understanding these nuances is crucial for grasping the complexities of national debt management in a global context, which is often addressed in UPSC syllabus materials.