Presentation on balance of payment
Download as PPT, PDF0 likes545 views
The balance of payments is a double-entry system that records all economic transactions between a country's residents and the rest of the world within a given period. It includes exports and imports of both visible items (goods) and invisible items (services, capital). The current account tracks trade balances as well as receipts and payments for services and transfers, while the capital account tracks foreign investment, loans, banking capital, and other financial flows. India's balance of payments was positive in early plans but turned negative in the 1980s and 1990s due to liberalized imports, Gulf wars, industrialization, and currency issues before becoming positive again in recent years.
Presentation on balance of payment
- 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!