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Question
Suppose the total receipts are ₹ 1045 Cr. and total payments are ₹ 1526 Cr. in the Balance of Payments account of India.
In the above context, which one of the following can improve the Balance of Payments of India?
Options
Indian tourists buying souvenirs in the foreign countries.
Foreign Institutional Investor (FII) buying shares of Indian companies.
Indian students joining foreign universities for higher education.
Value of the US dollar falling against the Indian rupee.
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Solution
Foreign Institutional Investor (FII) buying shares of Indian companies.
Explanation:
Foreign cash comes into India through FII investments, as foreigners use dollars and other foreign currencies to buy Indian stocks. This makes India’s foreign exchange reserves bigger, which helps lower the BoP imbalance.
