External Sector & Balance Of Payments — UPSC Prelims Previous Year Questions
49 questions from UPSC CSE Prelims GS Paper 1 on External Sector & Balance Of Payments (Indian Economy). Spanning from 1995 to 2022. Practice with show/hide answers and detailed explanations.
What UPSC Asks About External Sector & Balance Of Payments
Based on 49 questions across 23 years, UPSC has consistently tested aspirants' understanding of External Sector & Balance Of Payments within the broader Indian Economy syllabus. The questions range from factual recall to application-based analysis.
Recent trends show UPSC moving towards statement-based questions that combine multiple aspects of External Sector & Balance Of Payments. Aspirants should focus on understanding concepts rather than memorizing isolated facts.
Q: With reference to the Indian economy, consider the following statements:
1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.
Which of the above statements are correct?
Q: भारत में कार्य कर रही विदेशी-स्वामित्व की e-व्यापारिक फर्मों के संदर्भ में, निम्नलिखित कथनों में कौन-सा/से सही हैं?
1. अपने प्लेटफ़ॉर्मों को बाज़ार-स्थान के रूप में प्रस्तुत करने के अतिरिक्त वे स्वयं अपने माल का विक्रय भी कर सकते हैं।
2. वे अपने प्लेटफ़ॉर्मों पर किस अंश तक बड़े विक्रेताओं को स्वीकार कर सकते हैं, यह सीमित है।
नीचे दिए कूट का प्रयोग कर सही उत्तर चुनिए:
Q: निम्नलिखित कथनों पर विचार कीजिए :
1. US फेडरल रिजर्व की सख्त मुद्रा नीति पूंजी पलायन की ओर ले जा सकती है।
2. पूंजी पलायन वर्तमान विदेशी वाणिज्यिक ऋणप्रतिग्रहण (External Commercial Borrowings (ECBs)) वाली फर्मों की ब्याज लागत को बढ़ा सकता है।
3. घरेलू मुद्रा का अवमूल्यन, ECBs से सम्बद्ध मुद्रा जोखिम को बढ़ाता है।
उपयुक्त कथनों में कौन-से सही हैं ?
Q: निम्नलिखित पर विचार कीजिए :
1. विदेशी मुद्रा परिवर्तनीय बांड (Foreign Currency Convertible Bonds)
2. कुछ शर्तों के साथ विदेशी संस्थागत निवेश (Foreign Institutional Investment)
3. अमेरिकी डिपॉज़िटरी रसीद (Depository Receipts)
4. अनिवासी विदेशी जमा (Foreign Currency Non-Resident Deposits)
उपर्युक्त में से किसे/किन्हें विदेशी प्रत्यक्ष निवेश (FDI) में सम्मिलित किया जा सकता है/किया जा सकता है?
Q: निम्नलिखित कथनों पर विचार कीजिए :
किसी मुद्रा के अवमूल्यन (Devaluation) का प्रभाव यह है कि वह अनिवार्य रूप से
1. विदेशी बाज़ारों में घरेलू निर्यातों की प्रतिस्पर्धात्मकता को बढ़ाता है।
2. घरेलू मुद्रा के विदेशी मूल्य को बढ़ाता है।
3. व्यापार संतुलन में सुधार लाता है।
उपर्युक्त कथनों में से कौन-सा/कौन-से सही है/हैं?
Q: यदि निकट भविष्य में दूसरा वैश्विक वित्तीय संकट होता है, तो निम्नलिखित में से कौन-सी कार्यवाही/नीति, भारत को, सबसे अधिक संभावना के साथ, कुछ सुरक्षा प्रदान कर सकती है?
1. अवश्यम्भावी विदेशी ऋणों पर निर्भर न रहना
2. कुछ और विदेशी बैंकों का प्रवेश करना
3. पूंजी खाते में पूर्ण परिवर्तनीयता बनाए रखना
नीचे दिए गए कूट का प्रयोग कर सही उत्तर चुनिए :
Q: With reference to the international trade of India at present, which of the following statements is/are correct?
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel, chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
Q: निम्नलिखित कथनों पर विचार कीजिए:
1. भारत का अधिकांश विदेशी ऋण सरकारी ऋण के रूप में होता है।
2. भारत का सारा विदेशी ऋण US डॉलर के मूल्यवर्ग में है।
उपरोक्त में से कौन-सा/से कथन सही है/हैं?
Q: भारत के संदर्भ में, मुद्रा संकट के जोखिम को कम करने में निम्नलिखित में से किस/किन कारण/कारकों का योगदान है?
1. भारत के IT सेक्टर के विदेशी मुद्रा अर्जन का
2. सरकारी व्यय के बढ़ने का
3. विदेशों द्वारा भारत भेजे गए धन का
नीचे दिए गए कूट का प्रयोग कर सही उत्तर चुनिए।
Q: With reference to Balance of Payments, which of the following constitutes/constitute the Current Account?
1. Balance of trade
2. Foreign assets
3. Balance of invisibles
4. Special Drawing Rights
Select the correct answer using the code given below.
Q: Which of the following constitute Capital Account?
1. Foreign Loans
2. Foreign Direct Investment
3. Private Remittances
4. Portfolio Investment
Select the correct answer using the codes given below.
Q: Which of the following would include Foreign Direct Investment in India?
1. Subsidiaries of foreign companies in India
2. Majority foreign equity holding in Indian companies
3. Companies exclusively financed by foreign companies
4. Portfolio investment
Select the correct answer using the codes given below :
Q: Consider the following statements :
The price of any currency in international market is decided by the
1. World Bank
2. demand for goods/services provided by the country concerned
3. stability of the government of the concerned country
4. economic potential of the country in question
Which of the statements given above are correct?
Q: Consider the following actions which the Government can take:
1. Devaluing the domestic currency.
2. Reduction in the export subsidy.
3. Adopting suitable policies which attract greater FDI and more funds from FIIs.
Which of the above actions can help in reducing the current account deficit?
Q: Both Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) are related to investment in a country. Which one of the following statements best represents an important difference between the two?
(a)FII helps bring better management skills and technology, while FDI only brings in capital
(b)FII helps in increasing capital availability in general, while FDI only targets specific sectors
(c)FDI flows only into the secondary market, while FII targets primary market
Q: Assertion (A): ‘Balance of Payments’ represents a better picture of a country’s economic transactions with the rest of the world than the ‘Balance of Trade’.
Reason (R): ‘Balance of Payments’ takes into account the exchanges of both visible and invisible items whereas ‘Balance of Trade’ does not.
(a)Both A and R are true and R is the correct explanation of A
(b)Both A and R are true but R is not a correct explanation of A
Q: Consider the following statements:
1. In India, during the financial year 2004-2005 an increase of below 10 % over the value of exports (in rupee terms) in the financial year 2003-2004 was reported.
2. According to the WTO, India’s share in the world merchandise exports is 2 % in the year 2005.
Which of the statements given above is/are correct?
Q: Consider the following statements :
1. During the year 2004, India’s foreign exchange reserves did not exceed the 125 billion U.S. Dollar mark
2. The series of index numbers of wholesale prices introduced from April, 2000 has the year 1993-94 as base year.
Which of the statements given above is/are correct?
Q: Assertion (A): For the first time, India had no trade deficit in the year 2002-03.
Reason (R): For the first time, India's exports crossed worth $50 billion in the year 2002-03.
(a)Both A and R are individually true and R is the correct explanation of A
(b)Both A and R are individually true but R is not the correct explanation of A
Q: With reference to Government of India’s decisions regarding Foreign Direct Investment (FDI) during the year 2001-02, consider the following statements:
1. Out of the 100% FDI allowed by India in tea sector, the foreign firm would have to disinvest 33% of the equity in favour of an Indian partner within four years.
2. Regarding the FDI in print media in India, the single largest Indian shareholder should have a holding higher than 26%.
Which of these statements is/are correct?
Q: Assertion (A): During the year 2001-02, the value of India’s total exports declined, registering a negative growth of 2.17%.
Reason (R): During the year 2001-02, negative growth in exports was witnessed in respect of iron and steel, coffee, textiles and marine products.
(a)Both A and R are individually true and R is the correct explanation of A
(b)Both A and R are individually true but R is NOT the correct explanation of A
Q: India's external debt increased from US $98,158 million as at the end of March 2000 to US $100,225 million as at the end of March 2001 due to increase in
Q: Global capital flows to developing countries increased significantly during the nineties. In view of the East Asian financial crisis and the Latin American experience, which type of inflow is considered safest for the host country?
Q: Consider the following statements: Full convertibility of the rupee may mean
1. its free float with other international currencies.
2. its direct exchange with any other international currency at any prescribed place inside and outside the country.
3. it acts just like any other international currency.
Which of these statements are correct?
Q: Assertion (A): Ceiling on foreign exchange for a host of current account transaction heads was lowered in the year 2000. Reason (R): There was a fall in foreign currency assets also.
(a)Both A and R are individually true, and R is the correct explanation of A
(b)Both A and R are individually true, but R is NOT a correct explanation of A
Q: Consider the following statements:
The Indian rupee is fully convertible
I. in respect of Current Account of Balance of Payment.
II. in respect of Capital Account of Balance of Payment.
III. into gold.
Which of these statements is/are correct?
Q: Assertion (A): The rate of growth of India’s exports has shown an appreciable increase after 1991.
Reason (R): The Government of India has resorted to devaluation.
(a)Both A and R are true, and R is the correct explanation of A
(b)Both A and R are true, but R is not a correct explanation of A
Q: Assertion (A): Devaluation of a currency may promote export.
Reason (R): Price of the country's products in the international market may fall due to devaluation.
(a)Both A and R are true, and R is the correct explanation of A
(b)Both A and R are true, but R is not a correct explanation of A
Q: Consider the following statements: The price of any currency in the international market is decided by the
I. World Bank
II. demand for goods/services provided by the country concerned
III. stability of the government of the concerned country
IV. economic potential of the country in question
Of these statements:
Q: One of the important goals of the economic liberalisation policy is to achieve full convertibility of the Indian rupee. This is being advocated because
(a)convertibility of the rupee will stabilize its exchange value against major currencies of the world
(b)it will attract more foreign capital inflow in India
(c)it will help promote exports
(d)it will help India secure loans from the world financial markets at attractive terms
(a)received in rupees against overseas currencies and vice versa without going through the official channels
(b)received for sale/transfer of shares without going through the established stock exchanges
(c)received as commission for services rendered to overseas investors/buyers/sellers in assisting them to get over the red tape and/or in getting preferential treatment
(d)made to political parties or to individuals for meeting election expenses
Q: The changing composition of the export trade is indicative of structural transformation of Indian economy in favour of modernisation. The best indicator of the trend is the
(a)relative share of petroleum products in exports
(b)decline in the share of agricultural products in exports
(c)constant share of ores and minerals in exports
(d)increase in the share of manufactured products in exports
Q: Which of the following pairs are correctly matched?
I. Increase in foreign exchange reserves ................. Monetary expansion
II. Low import growth rate in India ...................... Recession in Indian Industry
III. Euro issues ................ Shares held by Indian companies in European countries
IV. Portfolio investment ............... Foreign institutional investors
Select the correct answer by using the following codes:
(a)I, II and IV
(b)III and IV
(c)I, II and III
(d)I, II, III and IV
Frequently Asked Questions
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions on External Sector & Balance Of Payments in GS Paper 1 Prelims between 1995 and 2022. This sub-topic falls under Indian Economy.
In which years has UPSC asked about External Sector & Balance Of Payments?▼
Questions on External Sector & Balance Of Payments have appeared in UPSC Prelims in the following years: 2022, 2021, 2020, 2019, 2016, 2015, 2014, 2013, 2012, 2011, 2010, 2007, 2006, 2005, 2004, 2003, 2002, 2001, 2000, 1999, 1998, 1996, 1995. The topic has appeared in 23 out of 31 years.
What is the difficulty level of External Sector & Balance Of Payments questions in UPSC Prelims?▼
Among 49 questions on External Sector & Balance Of Payments: 14 are easy, 33 are moderate, and 2 are difficult. Most questions test conceptual understanding of the topic.
