GS PrelimsEconomyExternal Sector2011

In terms of economy, the visit by foreign nationals to witness the XIX Common Wealth Games in India amounted to

A

Export

B

Import

C

Production

D

Consumption

Correct Answer: Option A

Explanation

1. In national income accounting and balance of payments, export refers to the sale of goods and services produced domestically to residents of foreign countries. 2. When foreign nationals visit India to witness events like the XIX Commonwealth Games, they purchase various services within India, such as accommodation, food, transportation, tickets, souvenirs, etc. 3. These services are produced domestically (within India) but are consumed by foreign residents (foreign nationals). 4. This expenditure by foreign nationals represents an inflow of foreign currency into India in exchange for domestically produced services. 5. Therefore, in economy terms, spending by foreign tourists/visitors within a country is treated as an export of services (tourism services). 6. Import would be spending by Indian residents abroad. Production and Consumption are broader terms; the specific transaction described fits the definition of an export.

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