With reference to “Remittances” consider the following statements:1. For India, remittances represent a greater source of external finance than the Foreign Direct Investment (FDI). 2. Remittances play a significant role in poverty reduction. 3. The low transaction cost of receiving remittances may lead to lower spending.Which of the statements given above is/are correct? |ForumIAS

Q. With reference to “Remittances” consider the following statements:
1.For India, remittances represent a greater source of external finance than the Foreign Direct Investment (FDI).
2.Remittances play a significant role in poverty reduction.
3.The low transaction cost of receiving remittances may lead to lower spending.
Which of the statements given above is/are correct?

[A] 1 only

[B] 2 and 3 only

[C] 1 and 2 only

[D] 2 only

Answer: C

Notes:

Explanation –

Statements 1 and 2 are correct. Remittances, for India, are a source of external finance larger in size than FDI, portfolio or development assistance flows. Remittances play a significant role in poverty reduction and improve health and educational outcomes of the recipient households.

Statement 3 is incorrect. The low transaction cost of receiving remittances may lead to higher spending because people then will get more money in their hands.

Source: ForumIAS

Post-Mains Strategy Session by Mr. Ayush Sinha | ForumIAS