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

1. India’s services exports are significant because:

2. A Balance of Payments crisis occurs when:

3. External Commercial Borrowings (ECBs) refer to:

4. Invisibles in Balance of Payments refer to:

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

6. Import cover of foreign exchange reserves measures:

7. India’s major import items include:

8. Foreign Exchange Reserves are held and managed by:

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

10. The Balance of Payments always balances because:

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

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

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

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

15. The term ‘Twin Deficit’ refers to:

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

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

18. The components of Foreign Exchange Reserves are:

19. The Tarapore Committee was related to:

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

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

22. Special Drawing Rights (SDRs) are:

23. Terms of Trade (ToT) refer to:

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

25. Net International Investment Position (NIIP) measures:

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

27. The Liberalized Remittance Scheme (LRS) allows:

28. The key difference between FDI and FPI is:

29. Capital Account Convertibility means:

30. The Marshall-Lerner Condition states that:

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

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

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

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

35. India’s major export items include:

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

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

38. Under FEMA, Current Account transactions are:

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

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

41. Current Account Deficit (CAD) occurs when:

42. Primary Income in Balance of Payments includes:

43. The Capital and Financial Account of BoP includes:

44. FDI policy in India is formulated by:

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

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

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

48. The Current Account of Balance of Payments includes:

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

50. FDI in India can come through which routes?