An Indian software enterprise earns export revenue from foreign clients, pays interest on a loan raised from an overseas commercial bank, and receives an official non-repayable developmental grant from an international body. According to the standard Balance of Payments accounting framework, how are these three transactions categorized?
- Software export revenue is recorded under trade in services, interest payments under primary income, and the non-repayable grant under secondary income, all within the Current Account.Cevap
- BSoftware export revenue and the non-repayable grant are categorized under the Current Account, whereas the interest payment on the foreign loan is recorded under the Capital Account.
- CSoftware export revenue is classified under the Current Account, while both the interest payment and the non-repayable grant are recorded under the Capital Account as financial transfers.
- DSoftware export revenue and interest payments are categorized under Current Account invisibles, while the non-repayable grant is entered under the Capital Account as foreign official assistance.
Cevap
Software export revenue is recorded under trade in services, interest payments under primary income, and the non-repayable grant under secondary income, all within the Current Account.
In IMF and RBI Balance of Payments accounting, the Current Account comprises Goods, Services, Primary Income, and Secondary Income. Software exports fall under Services, interest on foreign loans falls under Primary Income (income on capital), and official non-repayable grants fall under Secondary Income (current transfers). Thus, all three items are correctly classified under the Current Account.
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Sub-classification of Current Account Components in Balance of Payments (Goods, Services, Primary Income, Secondary Income)
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