Balance Of Payment

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Balance Of Payment

  1. 1. Jeevan Singh Karan Dhandh K.M.Singh Manish Garg Mehak Seth Mukul Ahluwalia PRESENTATION ON POSSIBLE MEASURES TO CORRECT B.O.P DISEQUILIBRIUM
  2. 2. <ul><li>BOP : </li></ul><ul><li>Balance of Payments is a systematic and summary record of a </li></ul><ul><li>country’s economic and financial transactions with the rest of </li></ul><ul><li>the world over a period of time </li></ul><ul><li>BOP SURPLUS : </li></ul><ul><li>INDIA's balance of payments surplus was lower by $1.88 billion for Q1 FY 2003 at $ 4.31 billion, as compared to a surplus of $6.19 billion in the same period the previous year </li></ul><ul><li>BOP DEFICIT : </li></ul><ul><li>The trade deficit has increased to $2.7 billion from $2.3 billion in the quarter as merchandise exports and imports being at $14.6 billion and $17.3 billion (on the payment basis) as compared to $12.3 billion and $14.6 billion in the corresponding period in the previous year </li></ul>
  3. 4. <ul><li>Automatic Correction </li></ul><ul><li>Flexible exchange rate </li></ul><ul><li>Fixed exchange rate </li></ul><ul><li>Price Adjustments </li></ul><ul><li>Interest Rate Adjustment </li></ul><ul><li>Income Adjustments </li></ul>
  4. 5. <ul><li>Monetary Measures </li></ul><ul><ul><ul><li>Monetary Contraction </li></ul></ul></ul><ul><ul><ul><li>Devaluation </li></ul></ul></ul><ul><ul><ul><li>Exchange Control </li></ul></ul></ul><ul><li>Trade Measures </li></ul><ul><li>Absorption </li></ul>
  5. 6. <ul><li>BOP is determined by how much is produced and how much is consumed </li></ul><ul><li>When internal consumption surpasses national income a current account deficit will result </li></ul><ul><li>During economic expansions both income and absorption will increase. </li></ul><ul><li>Governments have incentives to fiddle with absorption by: </li></ul><ul><li>changing the volume of the government expenditures </li></ul><ul><li>limiting the absorption of the economy through taxes </li></ul>
  6. 8. <ul><li>Using FOREX Reserves - incase of comfortable forex </li></ul><ul><li>External assistances - International Monetary Fund - Commercial borrowings - NRI deposits </li></ul>

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