Topic Details (Notes format)

External Sector Overview

Subject: Economics

Book: Comprehensive Indian Economy

India’s external sector includes trade in goods/services, capital flows (FDI, FPI), external commercial borrowings, and currency exchange. Policies strive to maintain a healthy balance of payments and adequate foreign exchange reserves. Key agencies—like the Directorate General of Foreign Trade—oversee export-import regulations. The shift from a closed economy to an export-oriented one brought new challenges: trade imbalances, currency fluctuations, and global competitiveness. Exam angles often cover India’s major trading partners, trade deficits with specific blocs, and how FTAs shape domestic industries. Students should also watch for external shocks like global oil price spikes or changing US Fed rates.

Practice Questions

What does the term "depreciation" refer to in the context of assets?

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What does the Gini Coefficient measure?

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What does “inclusive banking” mean?

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Which organization publishes the Human Development Index (HDI)?

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What is the main objective of disinvestment in public sector undertakings (PSUs)?

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Which of the following sectors contributes the most to India’s GDP?

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What is the primary purpose of Special Economic Zones (SEZs)?

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What is the meaning of “dumping” in international trade?

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What does the term “capital account” refer to in the balance of payments?

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Which of the following is NOT a function of the World Trade Organization (WTO)?

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