BoP — current, capital, financial account
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UPSC Prelims frequently tests definitional understanding of BoP account structures and their components rather than calculations. Examiners focus on distinguishing between current, capital, and financial accounts, identifying which transactions belong to each, and understanding recent India-specific BoP dynamics. Common errors include confusing capital and financial accounts post-2014 reclassification, or misclassifying service imports/exports.
Current account = goods, services, income, transfers
Capital account = non-financial assets, capital transfers
Financial account = investment, loans, reserves changes
BoP = Current + Capital + Financial = zero (double-entry)
India's persistent current account deficit, surplus financial inflows