Which of the following best describes the term 'import cover', sometimes seen in the news?
Show answer
Answer: D. Import cover is the number of months of imports a country could pay for using its foreign exchange reserves. It measures how safe a country's reserves are.
Watch for: The word 'cover' is unclear, so students pick a simple ratio instead of reserves measured in months.
Why the other options are wrong
- A. Wrong because the imports-to-GDP ratio is a measure of openness, not import cover.
- B. Wrong because total yearly imports is just the import bill.
- C. Wrong because the export-import ratio between two countries is a trade measure.
Source to check: RBI Annual Report and Weekly Statistical Supplement, 'Import cover of reserves (in months)' (rbi.org.in)
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.