UPSC PYQPrelims 2020

Civil Services Examination · Question 51

With reference to Foreign Direct Investment in India, which one of the following is considered its major characteristic?

  1. It is the investment through capital instruments essentially in a listed company.
  2. It is a largely non-debt creating capital flow.
  3. It is the investment which involves debt-servicing.
  4. It is the investment made by foreign institutional investors in the Government securities.
Show answer & explanation

Answer: (B) It is a largely non-debt creating capital flow.

Explanation

FDI is an equity-based, non-debt-creating flow and can be in listed or unlisted companies.