Which of the following best describes the term 'import cover', sometimes seen in the news?
Answer & explanation
Answer: (d) It is the number of months of imports that could be paid for by a country's international reserves
Import cover is a reserve-adequacy measure: foreign exchange reserves divided by the average monthly import bill, so it tells how many months of imports the reserves could pay for if all other inflows stopped. That is why it is always quoted in months.
- ✓ (d) The Economic Survey 2024-25 reports India's import cover as 10.9 months (December 2024) and notes that this exceeds the IMF's recommended three months for emerging economies.
- ✗ (a) Imports as a share of GDP is a measure of import dependence or openness, not of reserve adequacy.
- ✗ (c) The ratio of exports to imports describes the trade balance between partners; it says nothing about how long reserves would last.
Remember · Import cover = forex reserves ÷ monthly imports, expressed in months. A common rule of thumb is at least three months.
Sources
- Ministry of Finance: Economic Survey 2024-25, Ch 3 (External Sector) ↗ “The import cover, a crucial indicator of external sector stability, stood at 10.9 months as of December 2024. … India's forex reserves are sufficient to cover 90 per cent of external debt and provide an import cover of more than ten months, thereby safeguarding against external vulnerabilities.”
Question and answer: UPSC's official GS Paper I (2016, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·