The ppt is based on Balance of payment and Balance of trade, their meaning ,factors affecting them and difference between both i.e BOP & BOT. i hope this presentation will be helpful to you , as everything is tried to fit in these slides. i suggest everyone to just go through the economics text book and gain more insights if one is very much interested in it. please like the presentation and comment below your views about it. follow me on slideshare for more informative power point presentations.

1. Balance of Payment
V/s
Balance of Trade

2. Mohit
Karan
Shubham Parsekar
Atul
Teja .M
Wendell
TEAM

3. A Balance of Payment Account is a systematic record of all economic
transactions between residents of a country and the rest of the world
carried out in a specific period of time.
Meaning of Balance of Payment Account:

4. It is a systematic record of all economic transactions between one
country and the rest of the world.
It includes all transactions, visible as well as invisible.
It relates to a period of time. Generally, it is an annual statement.
It adopts a double-entry book-keeping system. It has two sides:
credit side and debit side. Receipts are recorded on the credit side
and payments on the debit side.
Features of Balance of Payment Account:

5. 1. Current Account Balance
2. Capital Account Balance and other minor components like errors and Omissions and
changes in Foreign Exchange Reserves
Current Account
Transactions
Merchandise
Transportation
, Insurance,
Miscellaneous
Incomes Transfers
Components of Balance of Payment Account:

6. Under Capital Account, capital inflows can be classified by instrument (debt or
equity) and maturity (short or long-term).
Capital Account
Foreign
Investments
Loans Banking
Capital
FDI, FIIs,
ADRs/GDRs
Commercial
borrowing, trade
credit
NRI Deposits
Capital Account:

7. Disequilibrium
Debit exceeds Credit or Credit exceeds Debit causing an
imbalance in the BOP a/c
Deficit: Our Receipts from foreigners fall below our
payment to foreigners. (Unfavourable)
Surplus: Receipts exceeds its Payment (Favourable)

8. Causes
Economic Factors
Imbalance between export & Import
New Source of supply & new substitutes
High Domestic Price
Political Factors
Instability & Disturbance cause large capital outflow.
Social Factors
Population Growth
Change in fashion

9. Monetary measures
Non – monetary measures
I. Monetary measures.
 Deflation
 Devaluation of currency
 Exchange control
 Increase in Direct and Indirect Tax
II. Non Monetary measures
 1.Export promotion
 2. Import substitution
 3.Quota
STEPS TO CORRECT BOP DEFICIT

10. The difference between a country's imports and its exports. Balance of
trade is the largest component of a country's balance of payments.
The items which include imports, foreign aid, domestic spending abroad
and domestic investments abroad comes under imports
The items which include exports, foreign spending in the domestic
economy and foreign investments in the domestic economy comes under
exports
When exports are greater than imports than the BOT is favorable and if
imports are greater than exports then it is unfavorable.
Favourable balance of trade indicates the good economic condition of
the country.
Balance of Trade

11. Cost of Production
Cost and Availability of Raw materials
Exchange Rate movements
Non-Tariff barriers such as environmental, health or
safety standards.
Factors Influencing Balance of Trade:

12. BASIS OF
COMPARISON
BALANCE OF TRADE BALANCE OF PAYMENT
Meaning Balance of Trade is a statement that captures
the country's export and import of goods
with the remaining world.
Balance of Payment is a statement
that keeps track of all economic
transactions done by the country
with the remaining world.
Records Transactions related to goods only. Transactions related to both goods
and services are recorded.
Capital Transfers Are not included in the Balance of Trade. Are included in Balance of
Payment.
Which is better? It gives a partial view of the country's
economic status.
It gives a clear view of the
economic position of the country.
Result It can be Favorable, Unfavorable or
balanced.
Both the receipts and payment
sides tallies.
Component It is a component of Current Account of
Balance of Payment.
Current Account and Capital
Account.

14. Thank You