Balance Of Payment ( Bo P)
-
Upload
guest8fdbdd -
Category
Business
-
view
25.226 -
download
0
description
Transcript of Balance Of Payment ( Bo P)
Balance of Payment (BoP)
Presented by
Parvathy.M.U
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 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
Current account Capital account Financial account Net errors and omissions account Reserves and related items:
official reserve 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 transfers related to the purchase and sale of fixed assets such as real estate
Financial account
Net foreign direct investmentNet portfolio investmentOther financial items
Net errors and omissions account
Missing data such as illegal transfers
Reserves and related items: official reserve
account Changes in official monetary reserves
including gold, foreign exchange, and IMF position.
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 %)
0
5
10
15
20
25
30
35
40
45
1970-71 1980-81 1990-91 2004-05
petroleum, crude &productsbulk consumptiongoodsother bulk items
capital goods
mainly export relateditems
Export proportion (%)
0
10
20
30
40
50
60
70
80
1970-71 1980-81 2004-05
agriculture & alliedproductsores & minerals
manufactured goods
minerals fuels
others
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
-400000
-300000
-200000
-100000
0
100000
200000
300000
1stplan
2ndplan
3rdplan
4thplan
5thplan
6thplan
7thplan
8thplan
9thplan
trade deficitnet invisiblesBoP
In 10th five year plan
-200000
-150000
-100000
-50000
0
50000
100000
150000
2002-03 2003-04 2004-05
trade deficitnet invisiblesBoP
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
euopean union
north america
other OECD
OPEC
eastern europe
developing countries
Direction of india’s imports
european union
north americaother OECD
OPEC
eastern europe
developing countries
Thank you
Any questions????????????