India’s Balance of payments (BoP) has become more resilient due to reforms, yet vulnerabilities have emerged from increased exposure to the global economy through liberalized trade and investment. Analyse.

Topic: Indian Economy: BoP

Topic: Indian Economy: BoP

Q4. India’s Balance of payments (BoP) has become more resilient due to reforms, yet vulnerabilities have emerged from increased exposure to the global economy through liberalized trade and investment. Analyse. (250 words)

Difficulty level: Tough

Reference: InstaPedia, IE

Why the question: Last week, data from the Reserve Bank of India (RBI) showed that India’s current account registered a surplus during the fourth quarter (Jan-Mar) of the 2023-24 financial year. This was the first time in 11 quarters that India had witnessed a surplus. Key Demand of the question: To write about BoP and India’s vulnerabilities with regard to its BoP. Directive word: Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and presenting them in a summary. Structure of the answer: Introduction: Begin by defining BoP and its various components. Body: 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 the steps needed to prevent it from any adverse impact. Conclusion: Conclude by writing a way forward.

Why the question:

Last week, data from the Reserve Bank of India (RBI) showed that India’s current account registered a surplus during the fourth quarter (Jan-Mar) of the 2023-24 financial year. This was the first time in 11 quarters that India had witnessed a surplus.

Key Demand of the question:

To write about BoP and India’s vulnerabilities with regard to its BoP.

Directive word:

Analyse – When asked to analyse, you must examine methodically the structure or nature of the topic by separating it into component parts and presenting them in a summary.

Structure of the answer:

Introduction:

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 the steps needed to prevent it from any adverse impact.

Conclusion:

Conclude by writing a way forward.