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  1. In which sub-account and on which side of balance of payments account will foreign investments in India be recorded? Give reasons.
  2. What will be the effect of foreign investments in India on exchange rate? Explain.
CBSE DELHI - SET 3 2016
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  1. Foreign investment will be recorded in the capital account of the BOP a/c because these give rise to foreign exchange liabilities Foreign investment will be recorded on the credit slide because these bring in foreign exchange to the economy.
  2. Foreign investment adds to supply of foreign exchange. Demand remaining unchanged, it brings downward influence on exchange rate.
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