In the capital account of the balance of payments, government aid and bilateral loans are shown under:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → external assistance
The capital account has three groups: investments, external borrowings and external assistance. Government aid and inter-governmental, multilateral and bilateral loans are examples of external assistance.
Direct and portfolio investment are the two kinds of investment. External commercial borrowings fall under external borrowings.
NCERT (2026-27): “6.1.2 Capital Account … Fig. 6.2 classifies the items which are a part of capital account transactions. These items are Foreign Direct Investments (FDIs), Foreign Institutional Investments (FIIs), external borrowings and assistance.”
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