UPSC IAS - 2011
In terms of economy, the visit by foreign nationals to witness the XIX Common Wealth Games in India amounted to
Year Asked: 2011
Correct Answer
A. Exports
Detailed Explanation
The correct answer is A) Exports. The key idea is who pays whom. When foreign nationals travel to India for the Commonwealth Games (held in Delhi in October 2010, the XIX edition), they spend money on hotels, transport, food, tickets and local services. That money flows into India from outside, so India earns foreign exchange without shipping any physical goods. Economists treat this as an invisible export, recorded under the services account of the current account in the Balance of Payments. Tourism receipts are a standard example.
- B) Imports is wrong because India is selling services to non-residents, not buying from abroad. An import would be an Indian resident paying a foreigner.
- C) Production is wrong because production is a domestic activity measured in GDP. The visit does not create a new good or service that is classified as production in this sense.
- D) Consumption is wrong because domestic consumption refers to spending by residents. Foreigners consuming Indian services is accounted for as an export, since the earnings come from outside the economy.
This sits within the syllabus on balance of payments, invisibles and the role of tourism and services in India's external sector. For Mains, it connects to the debate on services-led growth and the economic case for hosting mega events.
Trap: Aspirants see foreigners 'consuming' the event and pick D. Always ask whose money crosses the border and where it is recorded.
This question appeared in UPSC Prelims 2011 GS Paper-1.
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