UPSC Prelims 2016·GS1·economy·open economy

Which of the following best describes the term 'import cover', sometimes seen in the news?

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Last updated 23 May 2026, 3:31 pm IST
  1. AIt is the ratio of value of imports to the Gross Domestic Product of a country
  2. BIt is the total value of imports of a country in a year
  3. CIt is the ratio between the value of exports and that of imports between two countries
  4. DIt is the number of months of imports that could be paid for by a country's international reservesCorrect

Explanation

'Import cover' is an economic indicator that measures the adequacy of a country's foreign exchange reserves. It signifies how many months of a country's imports can be financed by its current stock of foreign exchange reserves. A higher import cover indicates a stronger external position and greater ability to withstand external shocks (like a sudden increase in import prices or a decrease in export earnings). For example, an import cover of 10 months means that a country's foreign exchange reserves are sufficient to pay for its imports for the next 10 months.
economy: Which of the following best describes the term 'import cover', sometimes seen in the news?
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