Which of the following statements will be considered as part of ‘ Transfer Payments ’ in the balance of payment? Gift sent by an NRI to his friend in India Money sent by an Indian employee to his family in India who has gone abroad temporarily Select the correct answer using the code given below: Options: A . &nbsp(ii) only B . &nbspBoth (i) & (ii) C . &nbsp(i) only D . &nbspNeither (i) nor (ii)

Which of the following statements will be considered as part of ‘Transfer

Question

Which of the following statements will be considered as part of ‘Transfer Payments’ in the balance of payment?

Gift sent by an NRI to his friend in India

Money sent by an Indian employee to his family in India who has gone abroad temporarily

Select the correct answer using the code given below:

Options:

A . (ii) only

B . Both (i) & (ii)

C . (i) only

D . Neither (i) nor (ii)

Answer: Option C
Answer: (c)
BoP is basically transactions of the residents of the country with the rest of the world. And transfer payments mean anything given for free.
In the (i) statement, the transaction between Indian residents and Non-Resident Indians (NRI) is for free, without any work done or consideration. So, it is a case of transfer payment and will be recorded in BoP.
In the (ii) statement, the transaction is between an Indian resident (who has gone abroad temporarily) and his family in India. Both are Indian residents, so, this transaction will not be recorded in BoP.

Was this answer helpful ?

Next Question