The presentation focuses on the topic of Indian foreign trade. The balance of trade and balance of payment are the important terms related to import and export. It is helpful for the students of international trade and commerce students.

1. BALANCE OF TRADE
AND
BALANCE OF PAYMENT
Prepared By:
Mohammad Shahnawaz
(Assistant Professor)
MBA (UGCNET-Management)
MA (UGCNET- Education)
M.A. (Economics)
B.Ed.

2. BALANCE OF TRADE
MEANING:
Records the volume of Goods and
Services exported as well as imported
by a country to other country.

3.  Record of trade between two countries.
Total Export-Total Import=Balance of Trade

4. TYPES OF BALANCE OF TRADE (BoT)
1. Favorable BoT- Importing less Exporting more.
 Also known as Positive balance of trade.
2. Unfavorable BoT- Importing more Exporting less.
 Also known as Negative balance of trade.

5. BALANCE OF PAYMENT (BoP)
 It is the record of all economic transactions between the
residents of the country and the rest of the world in
particular period of time.
 Record of nation’s financial transactions in Goods and
Services with rest of the world in a single accounting year.

6. Factors Causing BoP Disequilibrium
1.Political Factor
Political uncertainty, economic instability, war, etc.
2.Social Factor
Changing culture, taste, preferences and fashion, rate of
urbanization, etc.

7. 3.Economic Factor
 Structural changes in the economy, inflation,
development expenditure, etc.
4.Natural Factor
 Natural calamities like flood, earthquake, tsunami,
drought, etc.

8. Measure to correct BoP
Disequilibrium
1. Devaluation
 Official reduction of the external values of a currency.
 It helps to reduce imports and increase export by
making imports costlier and exports cheaper.

9. 2.Deflation
 It indicates fall in the price of commodity.
 It would make the products cheaper in foreign
markets.

10. 3.Export Promotion
 This includes tax concession to exporters, subsidies,
encouraging export production, etc.
4. Tariffs and Quotas
 When tariffs are imposed, price of imports increase
and this will reduce the demand for imported Goods.

11.  Under quota system government may fix quota of
commodity to be imported.
5. Non-tariff barriers
 One country’s government completely prohibits trade
with another country.

12. THANK YOU