The document discusses the balance of payments of a country, including: 1. The balance of payments records all economic transactions between a country and foreign countries over a period of time, including the current account (exports/imports of goods and services, incomes) and capital account (financial and physical asset transactions). 2. The current account includes the balance of trade (exports - imports of goods), balance of invisibles (services), and balance of transfers (gifts, payments). The capital account records short- and long-term capital transactions. 3. A balance of payments surplus occurs when total receipts exceed total payments, while a deficit happens when total payments are greater than receipts.

1. BALANCE OF PAYMENTS
AND ECONOMICS REFORM
TILL 1998
PRESENTATION BY :- ABHAY GUPTA
ENROLMENT NO. :- A7004620114
PROGRAM :- B.COM(HONS)
SEMESTER :- 4TH
SECTION :- A

2. • “ The balance of payments of a
country is a systematic record
of all economic transactions
between the residents of one
country and residents of foreign
countries during a given period
of time .”
BALANCE OF
PAYMENTS

3. COMPONENT OF BALANCE OF PAYMENTS
• Current Account- Records transactions relating to export and import of goods, services, unilateral
transfers and international incomes. Thus, balance on current account is the value of exports
minus the value of imports, adjusted for international incomes and net transfers.
• the export and import of goods are called visible items whereas invisible items include shipping,
banking, insurance, gifts.

4. COMPONENT OF BALANCE OF PAYMENTS
• Capital Account- records all international economic transactions relating to change in assets-both
financial and physical. it is a record of short term and long-term capital transactions, both private
and official. these are categorizes into two categories-
1- Direct foreign investments
2- Portfolio investments

5. STRUCTURE OF BALANCE OF PAYMENTS
• Balance of payments is a complete record of total receipts and total payments of
a country in relation to other countries over a given time period. Total receipts
are called CREDIT and total payments are termed as DEBIT.
• Credit side comprises of all those values received from foreign countries. On the
other hand, debit side comprises of all the payments made to other countries.
• It is maintained in a double entry book keeping system.

6. STRUCTURE OF BALANCE OF PAYMENT
CREDITS DEBITS
ITEMS OF
 Exports of goods
 Export of services
 Unilateral Transfer receipts (gifts, indemnities
to foreigners)
 Income receipts
CURRENT ACCOUNT
 Imports of goods
 Imports of services
 Unilateral Transfer payments (gifts,
indemnities to foreigners)
 Income payments
ITEMS OF
 Capital Receipts ( borrowings from capital
repayments by or sale of assets to foreigners).
CAPITAL ACCOUNT
 Capital Payments ( lending to, capital
repayments to or purchase of assets from
foreigners).

7. CATEGORIES OF BALANCE OF PAYMENT
• BALANCE OF TRADE-
BALANCE OF TRADE= EXPORT OF GOODS- IMPORT OF GOODS.
• BALANCE OF CURRENT ACCOUNT-
BALANCE OF CURRENT ACCOUNT= BALANCE OF TRADE+ BALANCE
OF INVISIBLES+ BALANCE OF TRANSFERS.
• BALANCE OF CAPITAL ACCOUNT-
BALANCE OF CAPITAL ACCOUNT= CAPITAL RECEIPTS CAPITAL
PAYMENTS

8. DISEQUILIBRIUM IN BALANCE OF PAYMENTS
• A disequilibrium in the balance of payments may appear either as A
surplus or as A deficit.
• A surplus in the BOP occurs when total receipts exceeds total payments.
Thus, BOP= CREDIT>DEBIT
• A deficit in the BOP occurs when total payments exceeds total receipts.
Thus, BOP= CREDIT<DEBIT

9. CAUSES OF DEFICIT IN BALANCE OF
PAYMENTS
Fall In Export Demand
 Growth Of Population
Change in foreign Exchange Rate
Huge International Borrowings
Developmental Expenditures
Demonstration Effect