Module: | Introduction, Scope and Residential Status
Q3: Which of the following statements, regarding the objectives and philosophy of FEMA, are correct?
1. FEMA aims to facilitate external trade, and payments.
2. The Act is designed to promote the orderly development, and maintenance of the foreign exchange market in India.
3. FEMA represents a shift in philosophy, from "conservation and control" of forex, to "management" of forex.
4. FEMA bans all personal foreign exchange transactions, to preserve national reserves.
2. The Act is designed to promote the orderly development, and maintenance of the foreign exchange market in India.
3. FEMA represents a shift in philosophy, from "conservation and control" of forex, to "management" of forex.
4. FEMA bans all personal foreign exchange transactions, to preserve national reserves.
✅ Correct Answer: C
FEMA replaced the older FERA legislation.
The shift was from strict "control" (policing) to "management" (facilitation). Its stated objectives include facilitating external trade and payments and promoting the "orderly development" of the forex market.
Statement 4 is incorrect because FEMA does not ban personal transactions; it allows them under specific schemes like the Liberalised Remittance Scheme (LRS).
The shift was from strict "control" (policing) to "management" (facilitation). Its stated objectives include facilitating external trade and payments and promoting the "orderly development" of the forex market.
Statement 4 is incorrect because FEMA does not ban personal transactions; it allows them under specific schemes like the Liberalised Remittance Scheme (LRS).