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

1. India’s services exports are significant because:

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

3. The Capital and Financial Account of BoP includes:

4. The Liberalized Remittance Scheme (LRS) allows:

5. The Current Account of Balance of Payments includes:

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

7. The key difference between FDI and FPI is:

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

9. The components of Foreign Exchange Reserves are:

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

11. Under FEMA, Current Account transactions are:

12. The term ‘Twin Deficit’ refers to:

13. The Marshall-Lerner Condition states that:

14. Special Drawing Rights (SDRs) are:

15. The Balance of Payments always balances because:

16. Current Account Deficit (CAD) occurs when:

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

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

19. Invisibles in Balance of Payments refer to:

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

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

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

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

24. The Tarapore Committee was related to:

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

26. India’s major export items include:

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

28. Import cover of foreign exchange reserves measures:

29. FDI policy in India is formulated by:

30. Capital Account Convertibility means:

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

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

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

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

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

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

37. Terms of Trade (ToT) refer to:

38. Net International Investment Position (NIIP) measures:

39. India’s major import items include:

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

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

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

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

44. FDI in India can come through which routes?

45. Foreign Exchange Reserves are held and managed by:

46. External Commercial Borrowings (ECBs) refer to:

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

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

49. Primary Income in Balance of Payments includes:

50. A Balance of Payments crisis occurs when: