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    The Balance of Payments Is The Statistical Record of A Country's International Transactions Over A Certain Period of Time Presented in The Form of Double-Entry Bookkeeping

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    Saurabh Srivastava
    The document discusses India's balance of payments for 2007-2008. It shows that India had a current account deficit as imports were greater than exports. However, India had an overall balance of payments surplus due to higher inflows in the capital account from foreign investment and loans. The capital account surplus more than offset the current account deficit, resulting in an overall surplus of 369.69 billion rupees. The balance of payments provides information on a country's international transactions and economic health.

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    The Balance of Payments Is The Statistical Record of A Country's International Transactions Over A Certain Period of Time Presented in The Form of Double-Entry Bookkeeping

    Uploaded by

    Saurabh Srivastava
    29 views12 pages
    The document discusses India's balance of payments for 2007-2008. It shows that India had a current account deficit as imports were greater than exports. However, India had an overall balance of payments surplus due to higher inflows in the capital account from foreign investment and loans. The capital account surplus more than offset the current account deficit, resulting in an overall surplus of 369.69 billion rupees. The balance of payments provides information on a country's international transactions and economic health.

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    Bop

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    The document discusses India's balance of payments for 2007-2008. It shows that India had a current account deficit as imports were greater than exports. However, India had an overall balance of payments surplus due to higher inflows in the capital account from foreign investment and loans. The capital account surplus more than offset the current account deficit, resulting in an overall surplus of 369.69 billion rupees. The balance of payments provides information on a country's international transactions and economic health.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    29 views12 pages

    The Balance of Payments Is The Statistical Record of A Country's International Transactions Over A Certain Period of Time Presented in The Form of Double-Entry Bookkeeping

    Uploaded by

    Saurabh Srivastava
    The document discusses India's balance of payments for 2007-2008. It shows that India had a current account deficit as imports were greater than exports. However, India had an overall balance of payments surplus due to higher inflows in the capital account from foreign investment and loans. The capital account surplus more than offset the current account deficit, resulting in an overall surplus of 369.69 billion rupees. The balance of payments provides information on a country's international transactions and economic health.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 12

    BALANCE OF PAYMENTS ACCOUNTING

    • The Balance of Payments is the statistical


    record of a country’s international
    transactions over a certain period of time
    presented in the form of double-entry
    bookkeeping.
    When we say “a country’s balance of payments” we
    are referring to the transactions of its citizens and
    government.
    BALANCE OF PAYMENTS EXAMPLE

    • Suppose that “A” Bicycle in USA imports


    $100,000 worth of bicycle frames from “B”
    Bicycles in England.
    • There will exist a $100,000 credit recorded
    by England that offsets a $100,000 debit at
    USA’s bank account.
    • This will lead to a rise in the supply of
    dollars and the demand for British pounds.
    PURPOSE OF BOP

    • Provides data for economic analysis


    • Reveals changes in the composition &
    magnitude of foreign trade
    • Provides indications of future repercussions of
    country’s past trade performances
    • Reveals the weak and strong points of a
    country’s foreign trade relations
    BALANCE OF PAYMENTS ACCOUNTS

    • The balance of payments accounts are those


    that record all transactions between the
    residents of a country and residents of all
    foreign nations.
    • They are composed of the following:
    – The Current Account
    – The Capital Account
    – Official Reserves Account
    CURRENT ACCOUNT (CA)

    • All transactions relating to goods, services


    constitute current account
    • Flow of items pertaining to specific
    period of time
    • Visible items include goods
    • Invisible items include services
    STRUCTURE OF CURRENT ACCOUNT

    Transaction Credit Debit Net Balance


    1. Merchandise Export Import -
    2. Foreign Travel Earning Payment -
    3. Transportation Earning Payment -
    4. Insurance Receipt Payment -
    (Premium)
    CURRENT A/C Surplus (+)
    Balance - - Deficit (-)
    CAPITAL ACCOUNT (KA)

    • It consists of short-term and long term capital


    transactions
    • It includes borrowings and investments
    OFFICIAL RESERVES ACCOUNT (RA)

    • Official Reserves represents the holding by the


    government or official agencies of the means
    of payments that are generally accepted for
    the settlement of international claims.
    India's Overall Balance of Payments ( RBI September, 2010 )
    Items 2007-08
    Credit Debit Net
    1 5 6 7
    A      
    CURRENT
    . ACCOUNT Import > Expor
      I. Merchandise 6,68,008 10,35,672 -3,67,664
      II. Invisibles 5,98,088 2,93,902 3,04,185
      Total Current Account (I+II) 12,66,096 13,29,575 -63,479
    B      
    CAPITAL
    . ACCOUNT
      1. Foreign Investment 10,86,530 9,12,135 1,74,395
      2. Loans 3,30,331 1,66,840 1,63,491
      3. Banking Capital 2,23,979 1,76,824 47,155
      4. Rupee Debt Service - 492 -492 More investments
      5. Other Capital 117,094 73,716 43,377 in the country
      Total Capital Account (1 to 5) 17,57,933 13,30,007 4,27,926
    C
    ERRORS
    . & OMISSIONS 5,241 - 5,241
    D OVERALL BALANCE (Total Current Account, 30,29,270 26,59,582 3,69,689
    . Capital Account and Errors &
    Omissions (A+B+C))
    E
    MONETARY
    . MOVEMENTS (i+ii) - 3,69,689 -3,69,689
    P: Preliminary. PR: Partially Revised. (` crore)
    TERMANOLIGIES

    • Favorable Balance Of Payments – Value of total


    receipts more than total payments
    • Adverse Balance Of Payments – Value of total
    receipts less than total payments
    • Balanced Balance Of Payments – Value of total
    receipts equals total payments
    DISEQUILIBRIUM

    • Total receipts and total payments inequality


    shows disequilibrium of balance of payments
    account
    • If payments>receipts, BOP shows Deficit
    • If payments<receipts, BOP shows Surplus
    CAUSES OF DISEQUILIBRIUM

    • Increase in imports
    • Slow progress in exports
    • Burden of interest payments
    • International developments
    • Deficit in capital account

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