Practice Questions on External Sector for UPSC, APPSC, TGPSC and other state PSC exams

1. Primary Income in Balance of Payments includes:

2. A Balance of Payments crisis occurs when:

3. FEMA (Foreign Exchange Management Act) was enacted in:

4. The Marshall-Lerner Condition states that:

5. Under FEMA, Current Account transactions are:

6. India’s share in global merchandise exports is:

7. The key difference between FDI and FPI is:

8. Union Budget 2025-26 proposed to increase FDI limit in insurance sector to:

9. The J-Curve effect in international trade suggests that:

10. External Commercial Borrowings (ECBs) refer to:

11. The sector attracting highest FDI equity inflow in India is:

12. Net International Investment Position (NIIP) measures:

13. India’s major export items include:

14. FDI policy in India is formulated by:

15. India’s Current Account Deficit in H1 FY 2025-26 was:

16. Capital Account Convertibility means:

17. Foreign Exchange Reserves are held and managed by:

18. The components of Foreign Exchange Reserves are:

19. India’s Foreign Exchange Reserves as of January 2026 stood at:

20. Foreign Direct Investment (FDI) is defined as:

21. FDI in India can come through which routes?

22. The Balance of Trade (BoT) refers to:

23. India’s services exports are significant because:

24. The highest ever monthly trade deficit in India was recorded in:

25. Foreign Portfolio Investment (FPI) is characterized by:

26. The term ‘Twin Deficit’ refers to:

27. Current Account Deficit (CAD) occurs when:

28. The concept of ‘Hot Money’ refers to:

29. Terms of Trade (ToT) refer to:

30. India’s merchandise trade deficit in FY 2024-25 was approximately:

31. India remained the world’s largest recipient of remittances with inflows of:

32. Invisibles in Balance of Payments refer to:

33. The top source country for FDI in India (cumulative) is:

34. India-US trade deal and India-EU FTA are significant for:

35. The Liberalized Remittance Scheme (LRS) allows:

36. The Real Effective Exchange Rate (REER) measures:

37. India’s cumulative FDI inflows from April 2000 to December 2025 crossed:

38. Import cover of foreign exchange reserves measures:

39. India’s major import items include:

40. The 1991 Balance of Payments crisis in India was caused by:

41. The Current Account of Balance of Payments includes:

42. Balance of Payments (BoP) is defined as:

43. India’s External Debt to GDP ratio of 19.2% indicates:

44. Special Drawing Rights (SDRs) are:

45. The Balance of Payments always balances because:

46. Which state received the highest FDI equity inflow in India?

47. India’s External Debt as of September 2025 stood at:

48. Secondary Income (Transfers) in Balance of Payments includes:

49. The Tarapore Committee was related to:

50. The Capital and Financial Account of BoP includes: