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

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

2. FDI policy in India is formulated by:

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

4. Invisibles in Balance of Payments refer to:

5. The Liberalized Remittance Scheme (LRS) allows:

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

7. The term ‘Twin Deficit’ refers to:

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

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

10. The Balance of Payments always balances because:

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

12. Under FEMA, Current Account transactions are:

13. Special Drawing Rights (SDRs) are:

14. Primary Income in Balance of Payments includes:

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

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

17. India’s major export items include:

18. External Commercial Borrowings (ECBs) refer to:

19. FDI in India can come through which routes?

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

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

22. The Marshall-Lerner Condition states that:

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

24. Capital Account Convertibility means:

25. India’s services exports are significant because:

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

27. Current Account Deficit (CAD) occurs when:

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

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

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

31. India’s major import items include:

32. The Tarapore Committee was related to:

33. Net International Investment Position (NIIP) measures:

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

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

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

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

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

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

40. The key difference between FDI and FPI is:

41. Terms of Trade (ToT) refer to:

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

43. A Balance of Payments crisis occurs when:

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

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

46. Foreign Exchange Reserves are held and managed by:

47. The Current Account of Balance of Payments includes:

48. The components of Foreign Exchange Reserves are:

49. The Capital and Financial Account of BoP includes:

50. Import cover of foreign exchange reserves measures: