Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment
Q6. Explain the growing role of invisible receipts in India’s Balance of Payments. Assess their impact on the sustainability of the current account. (10 M)
Difficulty Level: Medium
Reference: IE
Why the question:
India’s Balance of Payments is increasingly being shaped by invisibles like services and remittances, with recent RBI and World Bank data showing their outsized role in countering trade deficits.Key Demand of the question:
To explain how invisible receipts have evolved and expanded in India’s external account and assess their significance in maintaining a sustainable current account position.Structure of the Answer:
Introduction:
Define invisible receipts and briefly mention their rising share in India’s forex inflows.Body:
- Explain the major components of invisible receipts and their growth over the last two decades.
- Assess how these inflows contribute to stabilising the current account, forex reserves, and rupee stability.
Conclusion:
Emphasise that invisibles have become a structural strength for India’s external sector and must be supported through strategic policies.
