balance-of-payment-bo-p-1204234729180323-4 (1)

Balance of Payment (BoP): 

Balance of Payment (BoP) Presented by Parvathy.M.U

Definition : 

Definition “The Balance Of Payments of a country is a systematic record of all economic transactions between the ‘residents’ of a country and the rest of the world. It presents a classified record of all receipts on account of goods exported, services rendered and capital received by ‘residents’ and payments made by them on account of goods imported and services received from the capital transferred to ‘non-residents’ or ‘foreigners’.” – Reserve Bank of India (RBI)

Importance of BoP: 

Importance of BoP The BoP is an important indicator of pressure on a country’s foreign exchange rate . The BOP helps to forecast a country’s market potential, especially in the short run. Changes in a country’s BOP may signal the imposition or removal of controls over payment of dividends and interest, license fees, royalty fees, or other cash disbursements to foreign firms or investors.

Contents of BoP: 

Contents of BoP Current account Capital account Financial account Net errors and omissions account Reserves and related items: official reserve account

Current account : 

Current account Net export/import of goods (trade balance) Net export/import of services Net income (investment income from direct and portfolio investment plus employee compensation) Net transfers (sums sent home by migrants and permanent workers aboard, gifts, grants and pensions)

Capital account: 

Capital account Capital transfers related to the purchase and sale of fixed assets such as real estate

Financial account: 

Financial account Net foreign direct investment Net portfolio investment Other financial items

Net errors and omissions account: 

Net errors and omissions account Missing data such as illegal transfers

Reserves and related items: official reserve account : 

Reserves and related items: official reserve account Changes in official monetary reserves including gold, foreign exchange, and IMF position.

Components of the trade : 

Components of the trade Imports -bulk imports: petroleum, crude & products, bulk consumption goods, other bulk items. -non bulk imports: capital goods, mainly export related items Exports -agriculture and allied products, ores and minerals, manufactured goods, mineral fuels.

Import proportion (in %): 

Import proportion (in %)

Export proportion (%): 

Export proportion (%)

Invisibles(%): 

Invisibles(%) particulars 2003-04 2004-05 A. services 36.4 45.4 -travels 5.1 3.1 -transportation 3.2 .8 -software services 44.4 53 -miscellaneous (16.3) (11.6) B. Transfers 76.8 66.8 C. Income (16.2) (12.2)

BoP in five year plans: 

BoP in five year plans

In 10th five year plan: 

In 10 th five year plan

Countries with which India trade: 

Countries with which India trade OECD (1)European union -France -Belgium -Germany -UK -Italy (2) North America -Canada -USA (3) Other OECD -Australia -Japan -Switzerland OPEC Iran Indonesia Saudi Arabia UAE Eastern Europe Russia Developing countries China Hong-Kong South Korea Malaysia Sigapore SAARC Africa others

Direction of india’s exports: 

Direction of india’s exports

Direction of india’s imports: 

Direction of india’s imports

Thank you: 

Thank you Any questions????????????