AIR 9 · CSE 2023 · GS3 · 56 pages

Nausheen: GS3 answer copy

20 answers by Nausheen, as written in the test. Each question opens a page with how other toppers answered it.

The questions

The answers

Question 1 · 10 marks · 101 words written

Elaborate on the difference between Capital Account and Current Account as components of Balance of Payment (BOP). Suggest a few measures to balance the BOP deficit of India.

Opening · a definition

Balance of Payment is the systematic record of all transactions between residents and non-residents of a fixed time period, usually an year.

Body · points and prose

Diagram
[Balance of Payment] |-- [Current Account] | |-- Visibles | |-- Invisibles | |-- Gifts, Remittances | |-- [Capital Account] |-- FII |-- FDI |-- External Commercial Borrowings |-- State |-- Private

Differences between Capital Account and Current Account

Current AccountCapital Account
→ Includes goods services and remittances.→ Includes investments like FDI, FII etc.
→ Not associated with expertise transfer.→ FDI often comes with expertise
→ Doesn't require any special instrument.→ It may require special instruments like Promissory notes for FII.

Steps to balance BoP deficit in India

Diagram
[Steps] |-- Investing on renewable energy eg) green Hydrogen mission |-- Promoting exports by investing in standards of products eg) Organic products |-- Opening up of sectors under FDI under automatic route |-- signing long term MoUs or agreements for exports eg) MoU with Mozambique on wheat export |-- Building up strategic oil reserves eg) Padur, Chicakhole etc.

Close · no separate close

None written.