This PPT all about India’s Balance of Payment of three year comparison which is 2009-10, 2010-11, 2011-12.

1. Balance of Payment
Analysis
Presented by-
Nilesh Patil
Abhijit Patil
Mrunmayi Patil
Saurav Naik
Deepak Maru
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2. What Is BOP ?
 The balance of payments accounts are those that record all
transactions between the residents of a country and residents of all
foreign nations.
 The BOP is determined by the country's exports and imports of
goods, services, and financial capital, as well as financial transfers.
 It reflects all payments and liabilities to foreigners (debits) and all
payments and obligations received from foreigners (credits).
 Balance of payments is one of the major indicators of a country's
status in international trade
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3. BOP Consists of
◦ The Current Account
◦ The Capital Account
◦ Official Reserves Account
◦ Errors and Omissions
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4. Current Account
 Includes all imports and exports of goods
and services.
 Includes unilateral transfers of foreign aid.
 If the debits exceed the credits, then a
country is running a trade deficit.
 If the credits exceed the debits, then a
country is running a trade surplus.
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5. Current Account
1. Export & Import of Merchandise & Services
3. Income Account
(The income account accounts mostly for
investment income from dividends and interest
on credit and payments on foreign taxes.)
5. Transfer payment
(Grants received / given, Pvt. Transfer)
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6. Capital Account
Foreign Investment(FDI, FII)
n Banking Capital (NRI Deposits)
( Short term credit
t External Commercial
Borrowings(ECB)
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7. Capital Account
 If foreign ownership of domestic
financial assets has increased more
quickly than domestic ownership of
foreign assets in a given year, then
the domestic country has a capital
account surplus.
 On the other hand, if domestic
ownership of foreign financial assets
has increased more quickly than
foreign ownership of domestic assets,
then the domestic country has a
capital account deficit.
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8. Official International Reserves
 The official international reserve account
records the change in stock of official
international reserve assets (also known
as foreign exchange reserves) at the
country's monetary authority .
 Official reserves assets include gold
reserves, foreign currencies, SDRs, reserve
positions in the IMF.
 {Special Drawing Rights (SDRs) are
potential claims on the freely usable
currencies of IMF members.}
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9. Net errors and omissions
 This is the last component of the
balance of payments and
principally exists to correct any
possible errors made in
accounting for the three other
accounts.
 They are often referred to as
"balancing items".
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11. Major Highlights of BOP during
April-March 2011-12
 During the financial year 2011-12, while growth in
exports decelerated sharply to 23.6 per cent (37.5
per cent in 2010-11), imports grew by 31.1 per cent
as compared with 26.7 per cent in the previous year,
mainly reflecting higher imports of gold & silver.
 Imports of oil, which grew by 46.9 per cent, and of
precious metals which grew by 49.4 per cent,
together contributed nearly 45 per cent of total
imports during the year. Especially, international
price of the Indian basket of crude oil increased from
US$ 85.1 per barrel in 2010-11 to US$ 111.9 per
barrel in 2011-12.
 Consequently, the trade deficit widened to US$ 189.7
billion in 2011-12 from US$ 130.4 billion in 2010-11.
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12.  During the year, CAD widened to the highest ever
level both in absolute terms and as a proportion of
GDP. The CAD at US$ 78.2 billion was 4.2 per cent of
GDP in 2011-12 as compared with US$ 46.0 billion or
2.7 per cent of GDP during the previous year. The
rise in CAD-GDP ratio was also resulted from slower
GDP growth and its contraction in dollar terms due to
depreciation of rupee.
 FDI inflows and NRI deposits, in net terms, were
higher at US$ 22.1 billion and US$ 11.9 billion,
respectively, while portfolio net flows slowed down to
US$ 16.6 billion in 2011-12.
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14. Major Highlights of BOP during
April-March 2010-11
 During the year as a whole i.e. April-March 2010-11,
despite improvement in net invisibles surplus, higher
trade deficit led to increase in absolute size of current
account deficit. However, as a proportion of GDP,
CAD was marginally lower than the preceding year.
 In absolute terms, on BoP basis, the trade deficit
widened to US$ 130.5 billion (7.5 per cent of GDP)
during 2010-11 from US$ 118.4 billion (8.6 per cent
of GDP) a year ago.
 Net invisibles earnings increased to US$ 86.2 billion
from US$ 80.0 billion last year.
 The CAD at US$ 44.3 billion works out to 2.6 per cent
of GDP during 2010-11 as compared to US$ 38.4
billion (2.8 per cent of GDP) a year ago.
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15.  Net capital inflows increased to US$ 59.7
billion mainly driven by external assistance,
short-term trade credits, ECBs and banking
capital.
 Although net capital inflows were higher,
accretion to foreign exchange reserves
during 2010-11 was marginally lower as a
larger share of increased flows was absorbed
by the widened current account deficit.
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17. Major Highlights of BOP during
April-March 2009-10
 On a BoP basis, the trade deficit decreased marginally
to US$ 117.3 billion (8.9 per cent of GDP) during
2009-10 from US$ 118.7 billion (9.8 per cent of GDP)
a year ago.
 The current account deficit was higher at US$ 38.4
billion (2.9 per cent of GDP) during 2009-10, as
compared with US$ 28.7 billion (2.4 per cent of GDP)
during 2008-09, mainly due to lower net invisibles
surplus.
 The surplus in the capital account increased sharply
to US$ 53.6 billion (4.1 per cent of GDP) during the
year from US$ 7.3 billion (0.6 per cent of GDP) a
year ago.
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18.  As the surplus in the capital account
exceeded the current account deficit, there
was a net accretion to foreign exchange
reserves of US$ 13.4 billion during 2009-10
(as against a drawdown of reserves of US$
20.1 billion during 2008-09).
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19. Thank
You
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