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?

View Question

What is “open market operations” (OMO)?

View Question

What is the primary goal of a progressive tax system?

View Question

What is “CRR” in banking terminology?

View Question

What is meant by “structural unemployment”?

View Question

Which economic concept is described as “the next best alternative foregone”?

View Question

What is the main feature of a free-market economy?

View Question

What does the Gini Coefficient measure?

View Question

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

View Question

What is the objective of the Pradhan Mantri Jan Dhan Yojana?

View Question