Correct Option
The correct option is 2 and 3 only.
Explanation
The Balance of Payments (BoP) is a systematic record of all economic transactions between residents of a country and the rest of the world. It is primarily divided into two accounts: the Current Account, which deals with the trade of goods, services, and transfer payments, and the Capital Account, which records transactions involving financial assets and liabilities.
Statement-wise Analysis
- Statement 1 is Incorrect: The export and import of goods (visible trade) and services (invisible trade) are recorded in the Current Account. The Capital Account does not record trade in commodities; instead, it records cross-border movements of capital that alter the asset or liability status of a country (e.g., investments, loans).
- Statement 2 is Correct: The Capital Account consists of three main components:
- Investments: Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI).
- Loans: Sovereign loans and External Commercial Borrowings (ECBs).
- Banking Capital: NRI deposits and other banking capital.
- Statement 3 is Correct: A surplus in the Capital Account indicates a net inflow of capital. This occurs when the total capital inflows (receipts from foreign investments, loans taken, etc.) exceed the total capital outflows (investments made abroad, repayment of loans, etc.).
Key Takeaway: The fundamental distinction in BoP is that the Current Account tracks "actual" trade (goods/services), while the Capital Account tracks "financial" flows (investments/debt). ECBs represent debt creation and fall under the Capital Account.