Question
Which of the following is/are not a part of transfer
payments? 1. Remittances received by people residing in India 2. Imported Petrochemical products. 3. Grants from multilateral institutions. Select the answer from the code given below:Solution
Transfer payments are the receipts that the residents of a country get for free without having to pay for any goods or services. They Include migrants’ transfers by way of remittances for family maintenance, repatriation of savings and transfer of financial and real resources linked to changes in the resident status of migrants. 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 part of Transfer payments. 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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