The Indian government imports 22 Rafael planes from France. In which sub-account and on which side of the Balance of Payments account this transaction will be recorded?

Current account on the debit side.

The correct answer is Option (1) → Current account on the debit side.

The import of goods (like Rafael planes) involves payment to a foreign country — in this case, France.

• The Current Account of the Balance of Payments (BoP) records all transactions of goods, services, income, and transfers between residents and non-residents.

• Since Rafael planes are goods imported, it will be recorded under the “Merchandise Trade” (Visible Items) section of the Current Account.

• Because India is making a payment to France (foreign exchange outflow), it will appear on the Debit side of the BoP.