Contents

1. Importance of External Sector – Why Imports and Exports Matter 149

2. Types of Economies- Closed/Inward and Open/Outward 149

3. Balance of Payments 149

3.1. Components of Balance of Payments 149

3.1.1. Balance of Current Account 149

3.1.2. Balance of Capital Account 150

3.2. Balance of Payments Disequilibrium 151

3.3. Indian Balance of Payments Crisis (1991) 152

4. Opening of Indian Economy- Neo Liberal Economic Reforms 1991 152

4.1. 25 years of Neo-Liberal Economic Reforms 1991 153

4.2. Criticism of Neo-Liberal Economic Reforms / Is the Neo-Liberal Policy of 1991 Sustainable? 153

5. Currency Exchange Rate 154

5.1. Real Exchange Rate 154

6. Exchange Rate System – Fixed and Flexible Exchange Rate 154

7. Currency Exchange Rates – Concepts 154

8. Indian External Debt 155

9. Miscellaneous 157

9.1. New Model Indian Bilateral Investment Treaty 157

9.2. Indian Foreign Trade Policy (FTP) 2015 -2020 158

9.3. Relevance of WTO in Present Day Order 159

9.4. Important International Trade Agreements and Relevant Regional Global Significant for India 161

9.5. East Asian Crisis 1997 162

9.6. Recession of 2008 and India 162

9.7. Various Duties 163

9.8. Masala Bonds 163

9.9. Trade Deficit in India 164

9.10. Foreign Direct Investment, FII, FPI 164

9.10.1. Foreign Direct Investment 164

9.10.2. Foreign Portfolio Investment 164

9.10.3. Foreign Institutional Investors 164

9.11. Gaps Between MoUs and FDI 165

9.12. Reforms in FDI 165

9.13. Foreign Direct Investment Policy 2016 165

9.14. FDI in Retail – Case in point 166

10. Previous Years GS Mains Questions 167

11. Previous Years UPSC Mains Questions 175