Presentation on balance of payment

1. Eco NOMICS ISA

2. Balance of Payments
• It is a double entry system of record of all
economic transactions between the
residents of the country and the rest of the
world carried out in a specific period of
time.
• It takes into account the export and import
of both visible and invisible items.

3. BOP statement includes
• All the receipts on account of goods
exported
• Services rendered
• Capital received by residents
• Payments of residents
• Capital transferred to foreign

4. Balance of trade
• It deals with exports and imports of visible
items only.
• It takes into account only merchandise
exports & imports only.

5. Components of Balance of
Payments
• Current account
• Capital account

6. Current Account
– It includes visible exports and imports, and
invisible items like receipts and payments for
various services.
– It contains credit and debit items.
– Credit includes merchandise exports and
invisible exports.
– Debit includes merchandise imports and
invisible imports.

7. BOP position of India on current
account
• Its position is satisfactory at first five year plan. During the period
inflow of foreign capital was 127 cr. Deficit of current account was
only 42.3 cr.
• The second and third five year plans recorded negative balance of
payments.
• The fourth and fifth five year plans recorded positive balance of
payments with 100 cr. and 3082 cr. respectively.
• From 1985-86 to 1989-90 Balance of Payments are negative.
• During 2001-02 to 2004-05 India have surplus of BOP, but 2005-06
onwards it suffered with the deficit. Again India experienced positive
BOP in 2008-09.

8. Reasons for Deficit Balance
• Government liberalized imports in 1985 this leads
to the increase in imports significantly.
• the Gulf war in 1990’s
• the rapid industrialization (import of capital goods,
technology, etc.)
• the slow growth of invisibles
• the devaluation/depreciation of rupee against
importing countries
• 1990-91 crisis
• less exports

9. Capital Account
Components:
•Foreign investment
•Loans
•Banking capital
•Other capital

11. TABREZ SHAIKH
DIVESH GOYAL
ANSLEY
ROHAN MAYENKAR
DEELIP PORASH
JAI HIND!