Economics • Indian EconomyMedium
What does 'Current Account Deficit (CAD)' in India's balance of payments signify?
A. The country's total foreign exchange reserves have fallen below the statutory minimum threshold.
B. The total value of imported goods, services, and transfer payments exceeds the total value of exported goods, services, and transfer payments.✓ Correct Answer
C. The central government's fiscal borrowings exceed total domestic capital receipts.
D. Foreign portfolio investors have withdrawn more capital than direct investors have injected.
💡 Solution & Explanation
The Current Account Deficit measures a nation's net trade in goods, services, and net transfer payments with the rest of the world. When total outlays on imported items and transfers exceed earnings from exports and incoming transfers, the country runs a current account deficit. Fiscal borrowings concern budgetary deficits rather than the external balance of payments.
More Economics Indian Economy questions
- Examine the economic rationale and criteria adopted by recent Finance Commissions for horizontal tax…
- Which constitutional document outlines the estimated receipts and expenditure of the Government of India for…
- Which of the following bodies replaced the erstwhile Planning Commission of India, functioning as the premier…
- Which of the following measures is generally characterized as 'Contractionary Fiscal Policy'?
- What does the 'PM-DevINE' (Prime Minister's Development Initiative for North-East Region) scheme aim to…