1. BALANCE OF
PAYMENT
MADE BY-:ARVIND ARORA

2. BALANCE OF PAYMENT
 Balance of payments (BOP) accounts are an
accounting record of all monetary transactions
between a country and the rest of the world.
 It is mainly difference between import and
export of country.

4. SURPLUS AND DEFICIT
ITEMS
 Sources of funds for a nation, such as exports
or the receipts of loans and investments, are
recorded as positive or surplus items.
 Uses of funds, such as for imports or to invest
in foreign countries, are recorded as negative
or deficit items.

6. USES OF BOP
ACCOUNTS
 Weakness of country and strength as partner
in international trade.
 Reveals the changes in the composition and
magnitude of foreign trade.
 Indication of future repercussion of country’s
past trade performance .

7. KEY TRANSACTION IN BOP
1. AUTONOMOUS TRANSACTION
2. ACCOMODATING TRANSACTION

8. TYPES OF ACCOUNT UNDER
BOP
 They are composed of the following:
 The Current Account
 The Capital Account
 The Official Reserves Account
 Statistical Discrepancy

9. TYPES OF ACCOUNTS OF BOP
A. Current Account
A. Net exports/imports goods&services (Balance of Trade)
9
B. Net Income (investment income from direct portfolio investment plus
employee compensation
C. Net transfers (sums sent home by migrant abroad)
B. Capital Account
Capital transfers related to purchase and sale of fixed assets such as real estate
C. Financial Account
A. Net foreign direct investment
B. Net portfolio investment Basic Balance = A+B+C
C. Other financial items
D. Net Errors and Omissions Overall Balance = A+B+C+D
Missing data such as illegal transfers
E. Reserves and Related Items
Changes in official monetary reserves including gold and foreign exchange reserves
Σ (A:E) = Overall Balance

10. CAUSES OR KINDS OF BOP
DISEQUILIBRUM
 Cyclical disequilibrium
 Secular /long term disequilibrium
 Technological disequilibrium
 Structural disequilibrium

11. METHODS TO CORRECT
DISEQUILIBUM
 Trade policy measure
 Deflation
 Devaluation

12. CONTI…
 Capital movements
 Exchange control

13. CURRENT SCENARIO OF BOP IN
INDIA
APRIL- JUNE 2011
EXPORT IMPORTS NET
A.CURRENT 127.9 142.O -14.1
ACCOUNT(1+2+3+4)
1.GOODS 80.7 116.1 -35.4
2.SERVICES 30.6 18.7 11.9
3.PRIMARY INCOME 2.2 6.5 -4.3
4.SECONDARY 14.4 0.7 13.7
INCOME
B.CAPITAL ACCOUNTS 0.0 0.3 -0.3
C.FINANCIAL 127.3 111.6 15.7
ACCOUNTS
D.ERRORS&OMISSIO -1.3
N (A+B-C)

14.  THANK YOU
PRESENTED BY
ARVIND ARORA