UPSC | Prelims GS | 2026

Net foreign direct investment (FDI) is best understood as which of the following?

  1. Total inward direct investment minus total outward direct investment
  2. Total exports minus total imports of goods
  3. Foreign-exchange reserves minus external debt
  4. Government capital expenditure minus revenue expenditure

Answer

Correct Answer

Total inward direct investment minus total outward direct investment

Explanation

Option A is correct: the report defines net FDI as direct investment coming into India minus direct investment going out. It reported net FDI of $3.3 billion in August, positive for the third consecutive month. Options B, C and D describe unrelated macroeconomic differences, not net FDI.

Topics: balance of payments, foreign direct investment, indian economy, net fdi flows