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Question

How are remittances by NRIs helpful in tackling BoP deficit?

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Solution

Remittances by NRIs are reflected as receipts of foreign exchange in the capital account. If these receipts shoot up, then the BoP deficit (excess of payment of foreign exchange over and above the receipts of foreign exchange) is reduced. Thus, remittances by NRIs are helpful in tackling BoP deficit.


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