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Question
As per the Reserve Bank of India (RBI) press report, dated 22nd June, 2022:
"Net Foreign Portfolio Investment (FPI) recorded an outflow of US $15.2 billion mainly from the equity market."
The above transaction will be recorded in the ______ account on ______ side of Balance of payments account of India.
Options
current, credit
capital, credit
current, debit
capital, debit
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Solution
As per the Reserve Bank of India (RBI) press report, dated 22nd June, 2022:
"Net Foreign Portfolio Investment (FPI) recorded an outflow of US $15.2 billion mainly from the equity market."
The above transaction will be recorded in the capital account on debit side of Balance of payments account of India.
Explanation:
Foreign portfolio investment is a component of the BOP capital account since it affects a country's assets. While the outflow of foreign currency is noted as a debit (negative) item in the BOP. As a result, it decreases the country's capital account balance.
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