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

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

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

3. Under FEMA, Current Account transactions are:

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

5. Foreign Exchange Reserves are held and managed by:

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

7. The Marshall-Lerner Condition states that:

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

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

10. India’s services exports are significant because:

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

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

13. Primary Income in Balance of Payments includes:

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

15. The Balance of Payments always balances because:

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

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

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

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

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

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

22. A Balance of Payments crisis occurs when:

23. FDI policy in India is formulated by:

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

25. The key difference between FDI and FPI is:

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

27. The Capital and Financial Account of BoP includes:

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

29. The components of Foreign Exchange Reserves are:

30. The Current Account of Balance of Payments includes:

31. India’s major import items include:

32. Import cover of foreign exchange reserves measures:

33. India’s major export items include:

34. Net International Investment Position (NIIP) measures:

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

36. The Tarapore Committee was related to:

37. The term ‘Twin Deficit’ refers to:

38. Current Account Deficit (CAD) occurs when:

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

40. FDI in India can come through which routes?

41. Invisibles in Balance of Payments refer to:

42. The Liberalized Remittance Scheme (LRS) allows:

43. Terms of Trade (ToT) refer to:

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

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

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

47. External Commercial Borrowings (ECBs) refer to:

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

49. Special Drawing Rights (SDRs) are:

50. Capital Account Convertibility means: