Which of the following action(s) can help in reducing the current account deficit of a country?

  1. Increasing import duty
  2. Devaluation of the domestic currency against foreign currencies
  3. Increase in  foreign portfolio investment
  4. Increase in remittances

Select the correct option from codes given below:

Answer: [B] 1, 2 and 4 Only

Foreign portfolio investment forms a part of capital account and not current account.
Increasing import duty will make imports costly, and hence will reduce imports.Devaluation of currency will boost export and will reduce imports.Also; devaluation of currency will increase the remittances to country.
BoP on Current Account= (Export-Import) + (Invisible Payments – Invisible Receipt)


This question is a part of GKToday's Integrated IAS General Studies Module