Question

Which of the following does not constitute under Balance of Payments List ?
1. Budget estimation of external borrowing
2. Transaction between India and foreign countries
3. Transaction between India and IMF & World Bank
4. Grants given to Union Territories

Answer 1

Correct Answer - Option 4 : Grants given to Union Territories

The Correct Answer is Grants given to Union Territories.

• The balance of payments (BOP) is a report that summarizes all transactions between entities in one country and the rest of the world over a specified time span, such as a quarter or a year.
• The balance of payments (BOP), also known as the balance of foreign payments, is a tally of all transactions between individuals, companies, and government bodies within a country and those outside the country.
• Imports and exports of goods, services, and money, as well as transfer payments like foreign assistance and remittances, are all included in these transactions.
• The balance of payments divides transactions between the current account and the capital account.
• The capital account is sometimes referred to as the financial account because it is reported separately and is usually very small.
• The current account includes both product and service transactions, as well as investment gains and current transfers.
• The current account, capital account, and financial account are the three elements of the balance of payment. In ideal circumstances, the sum of the current account must balance with the total of the capital and financial accounts.