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UPSC 1998: Capital Account Convertibility of the Indian Rupee implies
(a)that the Indian Rupee can be exchanged by the authorised dealers for travel
(b)that the Indian Rupee can be exchanged for any major currency for the purpose of trade in goods and services
(c)that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets
(d)None of the above
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Not attemptedCorrect Answer: (c) that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets
Capital Account Convertibility (CAC) refers to the freedom to convert the domestic currency into foreign currency (and vice-versa) for capital transactions such as the purchase and sale of financial assets. Hence option (c) — exchange for trading financial assets — captures the essence of CAC, whereas option (b) describes current-account convertibility relating to trade in goods/services, and option (a) is limited to travel-related transactions. ([iasexamportal.com](https://iasexamportal.com/online-course/igp/csat-paper-i/economy/mcq-2?utm_source=openai))
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What is the correct answer to this UPSC 1998 Indian Economy question?▼
The correct answer is option (c): that the Indian Rupee can be exchanged for any major currency for the purpose of trading financial assets. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this External Sector & Balance Of Payments question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 1998, GS Paper 1, as Question 93. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "moderate". It requires sound conceptual understanding of the topic.
How many UPSC Prelims questions have been asked from External Sector & Balance Of Payments?▼
UPSC has asked 49 questions from External Sector & Balance Of Payments (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.