Examine the components of India's Balance of Payments accounts. Which category is recorded under the 'Capital Account' of the balance of payments?

💡 Solution & Explanation

Foreign Direct Investment, portfolio investments, external commercial borrowings, and banking capital transactions are recorded under the capital account of the balance of payments. Software service exports, remittances, and tourism receipts fall under the current account as invisibles. The capital account records transactions that alter the foreign assets or liabilities of residents. Together, current and capital accounts provide a comprehensive record of a nation's economic transactions with the rest of the world.