Import cover meaning — UPSC Prelims PYQ 2016

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

1. It is the ratio of the value of imports to the Gross Domestic Product of a country.
2. It is the total value of imports of a country in a year.
3. It is the ratio between the value of exports and that of imports between two countries.
4. It is the number of months of imports that could be paid for by a country’s international reserves.

Explanation

Option (d) is correct

• Import cover is a measure of the number of months of imports that the current level of foreign exchange reserves can support, and serves as an important indicator of the country’s resilience against external economic shocks.

Answer: (d) It is the number of months of imports that could be paid for by a country’s international reserves.; Difficulty Level: Easy