Question

Give two examples of items to be recorded on the debit side of the balance of payments.

Answer 1

1. Imports of Goods and Services:
   • Example: India imports oil from Saudi Arabia.
   • This is documented as a debit entry since it causes a foreign exchange outflow.
2. Investment Made Abroad:
   • Example: An Indian company invests in a U.S.-based firm.
   • It is documented as a debit since funds are leaving the nation.