GS3 › External Sector and Trade

Revision note: Balance of Payments, Exchange Rates and Convertibility

  • BoP (RBI, BPM6): current account (goods + invisibles: services, primary income, secondary income/remittances) + capital account + financial account (FDI, FPI, ECB, NRI deposits, reserves) + errors & omissions
  • India: goods deficit ~$280–290 bn; services surplus ~$180–190 bn; remittances ~$135 bn (largest in world); CAD ~0.6% of GDP in 2024–25; surplus in 2020–21
  • 1991 crisis: gold pledged; devaluation July 1991; LERMS 1992; managed float from March 1993
  • NEER/REER (40-currency basket); REER > 100 = overvalued; J-curve; Marshall–Lerner
  • Current account convertibility Aug 1994 (IMF Art. VIII); partial CAC; Tarapore 1997, 2006; LRS $250,000
  • Rupee trade: Vostro accounts July 2022; masala bonds
Revision card summarising Balance of Payments, Exchange Rates and Convertibility
One-page visual summary of the key points to revise.

Source: https://upscprep.in/upsc/gs3/external-sector-and-trade/balance-of-payments-exchange-rates-and-convertibility/ · UPSCPrep.in

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