economics medium MCQ

Which of the following transactions is recorded in the 'Capital Account' of India's Balance of Payments?

  1. Export of IT services to the USA
  2. Remittances sent by NRIs to their families in India
  3. Foreign Direct Investment (FDI) received by an Indian manufacturing firm
  4. Payment of interest on external commercial borrowings

Answer: Foreign Direct Investment (FDI) received by an Indian manufacturing firm

The Capital/Financial account records transactions that alter the asset or liability status of a country's residents or government. FDI, Foreign Institutional Investment (FII), and external borrowings represent capital flows that change ownership of assets or create long-term liabilities. Exports, imports, remittances, and interest payments belong to the Current Account.

Topic International Economics - BOP
Exam Relevance UPSC Prelims, SSC CGL
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