Analyze the structural components of India's Balance of Payments accounts. Which of the following transactions is recorded under the 'Capital Account'?

💡 Solution & Explanation

The capital account of the balance of payments records all financial transactions that result in a change in foreign assets or liabilities of a country, including foreign direct investment, foreign portfolio investment, and external commercial borrowings. In contrast, export of services, private remittances, and government grants are recorded under the current account. Capital account transactions alter the ownership of international financial claims and obligations. Monitoring capital flows is essential for managing foreign exchange reserves and exchange rate stability.