Q. Which of the following action(s) can help in reducing the current account deficit of a country?

1. Increasing import duty
2. Devaluation of the domestic currency against foreign currencies
3. Increase in foreign portfolio investment
4. Increase in remittances

Select the correct option from codes given below:
Answer: 1, 2 and 4 Only
Notes: Foreign portfolio investment forms a part of capital account and not current account.
Increasing import duty will make imports costly, and hence will reduce imports.Devaluation of currency will boost export and will reduce imports.Also; devaluation of currency will increase the remittances to country.
BoP on Current Account= (Export-Import) + (Invisible Payments – Invisible Receipt)

This question is part of UPSC Daily 20 MCQ Series Course on GKToday Android app.