Which of the following constitute Capital Account?
- Foreign Loans
- Foreign Direct Investment
- Private Remittances
- Portfolio Investment
Select the correct answer using the codes given below.
Detailed Explanation:
1. Foreign Loans – Capital Account: Borrowings from abroad by government or private sector represent capital inflows and are recorded in the Capital Account.
2. Foreign Direct Investment (FDI) – Capital Account: Long-term investments by foreign entities in domestic companies creating lasting interest are part of the Capital Account.
3. Private Remittances – Current Account: Funds sent by individuals (e.g., migrant workers) to their home country are transfer payments recorded in the Current Account, not Capital Account.
4. Portfolio Investment – Capital Account: Investments in stocks, bonds, and financial securities by foreigners are short-term capital flows part of the Capital Account.
Correct Answer: Option 2 (1, 2 and 4 only) – Private Remittances fall under Current Account.
Question 9 of 12 Balance of Payments
Practice PYQ questions from this topic across all years
With reference to Balance of Payments, which of the following constitutes/constitute...
The balance of payments of a country is a systematic record of