Question
Which of the following are part of transfer
payments? 1. Remittances received by people residing in India 2. Imported Petro-Chemical products. 3. Grants from multilateral institutions. Select the answer from the code given below:Solution
тЧП Option 1 is correct: Transfer payments are the receipts which the residents of a country get for free without having to pay for any goods or services. They Include migrantsтАЩ transfers by way of remittances for family maintenance, repatriation of savings and transfer of financial and real resources linked to change in resident status of migrants. тЧП Option 2 is Incorrect: Transfers payments represent one-sided transactions, i.e., transactions that do not have any quid pro quo. Since payments have to be made for the imported material, it does not form the part of Transfer payments. тЧП Option 3 is correct: Official transfer receipts record grants, donations and other assistance received by the Government from bilateral and multilateral institutions. Similar transfers by Indian Government to other countries are recorded under official transfer payments.
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