With reference to India’s external sector, consider the following statements: 1. The Current Account records transactions such as exports, imports, interest payments, and remittances. 2. Unlike the Current Account, the Capital Account may show a surplus or deficit depending on capital inflows and outflows. Which of the statements given above is/are correct? |ForumIAS

[A] 1 only

[B] 2 only

[C] Both 1 and 2

[D] Neither 1 nor 2

Answer: A

Notes:

Explanation:

The Current Account captures current transactions such as exports, imports, remittances, and interest payments, and can show a surplus or deficit.
The Capital Account records capital transactions (like FDI, external borrowing, etc.), but it does not show a surplus or deficit as the Current Account does. It is treated as a balancing entry in the overall balance of payments.
Source- TMH Indian Economy by Ramesh Singh