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UPSC 2021: Consider the following : 1. Foreign currency convertible bonds 2. Foreign institutional investment with certain conditions 3. Global depository receipts 4. Non-resident external deposits Which of the above can be included in Foreign Direct Investments?
(a)1,2 and3
(b)3 only
(c)2 and 4
(d)1 and 4
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Not attemptedCorrect Answer: (a) 1,2 and3
Foreign Currency Convertible Bonds (FCCBs) and Global/American Depository Receipts are treated as FDI because the funds ultimately convert into equity of the Indian company. Foreign Institutional Investment can also be classified as FDI when the investor’s stake breaches the 10 % threshold stipulated by OECD/IMF definitions—hence ‘with certain conditions’ it can be included. Non-resident FCNR deposits are bank liabilities and never count as FDI. Thus items 1, 2 and 3 qualify ⇒ option (a). ([vajiramandravi.com](https://vajiramandravi.com/upsc-exam/consider-the-following-8/?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2021 Indian Economy question?▼
The correct answer is option (a): 1,2 and3. 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 2021, GS Paper 1, as Question 7. It falls under Indian Economy > External Sector & Balance Of Payments.
What is the difficulty level of this UPSC question?▼
This question is rated "difficult". It is a challenging question that demands deep subject knowledge and analytical thinking.
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.