Question:
Identify which of the following will appear on the debit side in the Capital Account of India’s Balance of Payments:
Identify which of the following will appear on the debit side in the Capital Account of India’s Balance of Payments:
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Capital account debit entries indicate outflows of funds, such as investments abroad or repayment of loans.
Updated On: Jan 30, 2025
- An Indian sending remittances from England
- Investing in assets abroad by Indians
- An American company purchasing shares of an Indian company
- Export of spices from India
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The Correct Option is B
Solution and Explanation
A debit entry in the Capital Account of the Balance of Payments (BoP) represents an outflow of funds.
Option (B): When Indians invest in assets abroad, there is an outflow of capital from India, which is recorded as a debit entry.
Options (A), (C), and (D): These relate to current account transactions or represent capital inflows, which are credit entries.
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