Which of the following components is included in calculating India's 'Current Account' in the Balance of Payments?

💡 Solution & Explanation

The Current Account within the Balance of Payments framework accounts for transactions involving merchandise trade in goods, services, primary income including investment returns, and secondary income consisting of unilateral transfers like remittances. External commercial borrowings and foreign direct investments belong to the Capital and Financial Account because they create liabilities or alter ownership of foreign assets. Monitoring the current account deficit is crucial for evaluating a nation's external economic stability and currency strength.