The question (15 marks)
Explain the structure of the balance of payments. In what sense does it always balance, and what is meant by disequilibrium? Illustrate from India's recent position and from the crisis of 1991. (15 marks)
Standing MU question on Module 4 head 2. Built from chapter 20 and worked example 14.
Plan your answer on paper before you look at the authorities — issue first, then the rule, then apply it to these facts.
It tests Unit 4 · External Sector of Economics.
Authorities you will need
- Balance of payments identity: current account balance + capital account balance + change in reserves = 0
- Reserve Bank of India press release on developments in India's balance of payments, first quarter of 2025-26
How an answer is marked
A full-marks answer names the issue in one line, states the rule with its section, cites the authority, applies it to these facts and concludes — in that order. The app's model answer for this question is written in exactly that shape, with a checklist to mark your own attempt against.