Economics • Indian EconomyHard
Evaluate the composition of India's Current Account in the balance of payments. What transactions are classified under 'Invisibles'?
A. Merchandise trade of heavy machinery, petroleum products, and electronic hardware
B. Services trade, investment income, and private and official transfer payments✓ Correct Answer
C. Foreign direct investments, external commercial borrowings, and portfolio capital flows
D. Changes in central bank foreign exchange reserves and international monetary fund quotas
💡 Solution & Explanation
In the balance of payments accounts, invisibles comprise non-merchandise transactions categorized into services such as software and travel, primary income covering investment returns, and secondary income including private remittances from abroad. Merchandise trade constitutes the visible component. Surpluses in invisibles frequently offset trade deficits in India's current account.
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