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    Balance of Payments: Group 12 Dilip K Ahmed Mudassar P B Atul Pal Jacob George

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    atulpal112
    The document discusses balance of payments (BOP), which is an accounting record of monetary transactions between a country and the rest of the world, including payments for exports/imports and financial transfers. It notes the current account tracks trade/income, the capital account tracks investment/loans, and a balancing item accounts for errors. Trends in several countries' BOPs between 2005-2009 are presented, including current account balances, FDI, trade surpluses/deficits, and other details.

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    Balance of Payments: Group 12 Dilip K Ahmed Mudassar P B Atul Pal Jacob George

    Uploaded by

    atulpal112
    42 views16 pages
    The document discusses balance of payments (BOP), which is an accounting record of monetary transactions between a country and the rest of the world, including payments for exports/imports and financial transfers. It notes the current account tracks trade/income, the capital account tracks investment/loans, and a balancing item accounts for errors. Trends in several countries' BOPs between 2005-2009 are presented, including current account balances, FDI, trade surpluses/deficits, and other details.

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    The document discusses balance of payments (BOP), which is an accounting record of monetary transactions between a country and the rest of the world, including payments for exports/imports and financial transfers. It notes the current account tracks trade/income, the capital account tracks investment/loans, and a balancing item accounts for errors. Trends in several countries' BOPs between 2005-2009 are presented, including current account balances, FDI, trade surpluses/deficits, and other details.

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    42 views16 pages

    Balance of Payments: Group 12 Dilip K Ahmed Mudassar P B Atul Pal Jacob George

    Uploaded by

    atulpal112
    The document discusses balance of payments (BOP), which is an accounting record of monetary transactions between a country and the rest of the world, including payments for exports/imports and financial transfers. It notes the current account tracks trade/income, the capital account tracks investment/loans, and a balancing item accounts for errors. Trends in several countries' BOPs between 2005-2009 are presented, including current account balances, FDI, trade surpluses/deficits, and other details.

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    of 16

    BALANCE OF PAYMENTS

    Group 12

    Dilip K
    Ahmed Mudassar P B
    Atul Pal
    Jacob George
    WHAT IS BOP?

    A balance of payments (BOP) sheet is an


    accounting record of all monetary transactions
    between a country and the rest of the world.

    These transactions include payments for the


    country’s exports and imports of goods, services,
    and financial capital, as well as financial
    transfers.
    Composition of the balance of
    payments sheet
     Since 1974, the two principal divisions on the BOP
    have been the current account and the capital account.

    BOP = Current A/C – Capital A/C + - Balancing item

    Current A/C -  It is the sum of the balance of trade (net


    earnings on exports – payments for imports), factor
    income (earnings on foreign investments – payments
    made to foreign investors) and cash transfers.
    Capital A/C -  It includes the reserve account (the
    international operations of a nation's central
    bank), along with loans and investments between
    the country and the rest of world.
    Balancing Item – It is simply an Amount that
    accounts for any statistical errors & assures that
    the current & capital accounts sum to zero.
    History of balance of payments issues

     Pre-1820: Mercantilism
     1820–1914: Free trade
     1914–1945: Deglobalisation
     1945–1971: Bretton Woods
     1971–2009: Transition, Washington Consensus,
    Bretton Woods II
     2009 and later: Post Washington Consensus
     Competitive devaluation after 2009
    TRENDS & PROBLEMS OF INDIA’S
    BALANCE OF PAYMENT (1949-2000)
     Protectionist policies
     External Debt
     Export promotion
     Exchange rate
     New Economic Policy
    TRENDS IN INDIA’S BOP (2000-
    2010)
     Foreign Investment
     Foreign Exchange Reserves
     Exchange Rate
     Current Account of BOP
    BOP 2008-09 & 2009-10 INDIA
    Sl Particulars 2008-09 2009-10
    no. US Million $ US Million $
    1. Current Account -27915 -38383
    2. Capital Account

    1. Foreign Investment
    a. FDI 19816 18771
    b. FII -14031 32396

    2. Loans 8318 13259


    3. Banking Capital -3246 2084
    4. Other Capital -3990 -13016

    Total 6768 53397


    3. Errors & Omissions 1067 -1573
    4. Overall Balance -20080 13441
    CURRENT ACCOUNT DETAILS 2009-2010 - INDIA

    Particulars 2008-09 - US Million $ 2009-10 - US Million $

    CURRENT ACCOUNT  

    I. MERCHANDISE -119,520 -118,374

    II.INVISIBLES (a+b+c) 91,605 79,991

    a) Services 53,916 35,726

    i) Travel 1,469 2,517

    ii) Transportation -1,509 -757

    iii) Insurance 292 317

    iv) G.n.i.e. -404 -86

    v) Miscellaneous 54,070 33,735

    of which    

    Software Services 43,736 48,236

    Business Services 3,286 -6,681

    Financial Services 1,470 -907


    Communication
    Services 1,211 -126
    b) Transfers 44,798 52,305

    i) Official 232 250

    ii) Private 44,567 52,055

    c) Income -7,110 -8,040

    i) Investment Income -6,626 -7,249

    ii) Compensation of Employees -484 -791

    Total Current Account (I+II) -27,915 -38,383


    INDIA
    2005 2006 2007 2008 2009

    (In US $ )

    CURRENT - - - - -
    ACCOUNT 10,283,543,30 9,299,060,317 8,075,694,484 27,915,104,30 38,382,761,17
    BALANCE 8 4 1.

    FOREIGN 7,606,425,242 20,335,947,44 25,127,155,85 41,315,303,44 34,577,177,46


    DIRECT 8 2 7 8
    INVESTMEN
    TS

    PORTFOLIO 12,151,206,54 9,509,114,658 32,862,817,21 - 21,111,850,03


    EQUITIES 8 7 15,029,184,81 9
    NET 5
    INFLOWS

    ROYALTIES 671,829,366. 845,949,436. 1,159,824,391 1,528,826,913 1,860,283,808


    AND FEES . . .
    PAYMENTS 205,974,584 60,913,260 163,126,497 147,815,443 192,555,770
    AND
    RECEIPTS
    USA
    2005 2006 2007 2008 2009
    (in US $)

    CURRENT - - - - -
    ACCOUNT 747,594,600,4 802,640,077,0 718,095,038, 668,858,621, 378,434,537,
    BALANCE 77 00 000 000 000

    FOREIGN 112,638,000, 243,151,000,0 271,211,000, 328,334,000, 134,710,000,


    DIRECT 000 0 000 000 000
    INVESTME
    NTS

    PORTFOLIO 89,258,000,0 145,482,000,0 275,617,000, 126,396,000, 160,534,000,


    EQUITIES 00 00 000 000 000
    NET
    INFLOWS
    ROYALTIES 24,612,000,00 23,519,000,00 24,931,000,0 25,781,000,0 25,230,000,0
    AND FEES 0. 0. 00. 00. 00.
    PAYMENTS
    AND 64,395,000,00 70,727,000,00 84,580,000,0 93,920,000,0 89,791,000,0
    RECEIPTS 0 0 00 00 00.
    US Trade deficit
      In 2009, the U.S. imported over $253 billion in petroleum-
    related products while only exporting $49 billion. This oil-
    related deficit of $204 billion was over half of the total 2009
    trade deficit of $380.7 billion.
     Consumer products:In 2009, the U.S. ran a $103 billion
    deficit, importing $253 billion while only exporting $150
    billion.
     Services :It exported $507 billion while importing only $371
    billion. This caused a surplus of $136 billion.
    US EXPORTS:33 % to Canada and Mexico, 15 % to Japan
    ,China U.K.
    US IMPORTS:33% from Canada and China,10 % from
    Mexico ,Japan ,Germany .
    2005 2006 2007 2008
    CHINA
    2009

    (IN US $)

    CURRENT 160,818,310,5 253,267,862,3 371,832,620,1 436,107,395,0 297,142,047,9


    ACCOUNT 53 59 15 63 69
    BALANCE

    FOREIGN 79,126,731,41 78,094,665,75 138,413,185,2 147,791,063,8 78,192,727,41


    DIRECT 3 1 03 22 3
    INVESTMEN
    TS

    PORTFOLIO 20,346,000,00 42,861,200,00 18,509,607,49 8,721,011,173 28,160,664,46


    EQUITIES 0 0 3 3
    NET
    INFLOWS

    ROYALTIES 5,321,253,863 6,634,081,020 8,192,067,402 10,319,466,35 11,065,271,08


    AND FEES . 6. 2.
    PAYMENTS 157,401,786 204,503,785 342,634,075 570,536,223 429,452,520
    AND
    RECEIPTS
    China trade Surplus.
     In 2009. Current account surplus: $297.1 Bln
    Goods account surplus : $249.5 Bln.
    Income account surplus: $ 43.3 Bln.
    Current transfer surplus : $33.7 bln.
    Service account deficit : $ 29.4 Bln. Transportation: $ 23 bln
    Patent fees: $ 10.6 bln
    Insurance services:$ 9.7 bln
    Tourism : $4 bln.

    Surplus is also influenced by:


    Factors of production.
    Undervaluation of currency.
    China exports to : EU ,USA and Honk Kong (around 50 %)
    China Imports from:Japan (12- 14%),EU, ASEAN ,South korea ,Taiwan
    RUSSIA
    2005 2006 2007 2008 2009

    (IN US $ )

    CURRENT 84,602,174,30 94,686,391,30 77,768,325,30 103,660,704,7 49,432,638,88


    ACCOUNT 0 0 0 00 9
    BALANCE

    FOREIGN 12,885,807,50 29,701,427,10 55,073,197,80 75,002,416,00 36,750,625,00


    DIRECT 0 0 0 0 0
    INVESTMEN
    TS

    PORTFOLIO -99,849,700 6,479,706,600 18,674,599,50 - 3,369,014,500


    EQUITYS 0 15,005,353,90
    (net inflows) 0

    ROYALTIES 1,593,210,000. 2,002,100,000. 2,806,130,000 4,594,540,000 4,106,950,000


    AND FEES 260,200,000 299,270,000 . . .
    PAYMENTS 396,360,000 453,360,000 493,670,000
    AND
    RECEIPTS

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