Topic: Government Budgeting.
4. What is Balance of payments (BoP)? Even though the reform process has strengthened resilience of India’s BoP, at the same time vulnerabilities arise with greater exposure of the economy to the rest of world through liberalised trade and investment environment. Analyse. (250 words)
Difficulty level: Tough
Why the question: The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2022 Secure timetable.
Key Demand of the question: To write about BoP and India’s vulnerabilities with regards to its BoP.
Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and present them in a summary.
Structure of the answer:
Begin by defining BoP and its various components.
First, in brief, elaborate on the evolution of India’s BoP and various crises faced with respect to BoP.
Next, write about the various reforms undertaken to strengthen India’s BoP scenario and write about their impact.
Next, write about the present vulnerabilities with respect to India’s BoP and steps needed to prevent it from any adverse impact.
Conclude by writing a way forward.