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Ba lance of

pa yments trends
Presented by:
Harsh Jain, M. Deepak,
Ashok Jaiswal
Balance of payments
• A balance of payment account is a statement of double
entry system of record of all economic
transactions( involving foreign payments) between
residents of a country and the rest of the world carried
out in specific period of time.
• Accounting framework and statistical record of all the
economic and Financial flows that take place over a
specified time period between residents of the reporting
country and rest of the world.

Purpose of balance of payments
§ It provides data for economic
analysis.

§ It reveals strong and weak points of a


country’s foreign trade relations.

§ It provides indication of future


repercussions of country’s past
trade performances.

§ It reveals changes the composition &


magnitude of foreign trade.
Balance of payments account
Current account
• All transactions relating to goods,
services and unrequited transfers
constitute current account.

• Flow of items pertaining to specific


period of time.

• Visible goods is also known as


tangible goods which we can see like
goods.

• Invisible goods is also known as


Structure of current accounts
Transaction Credit Debit Net balance
1.Merchandise Export import -
2.Foreign table Earning Payment -
3.Transportati Earning Payment -
on
4.Insurance Receipt Payment -
premium
5.Investment Dividend Dividend -
income
6.Government receipt
Receipt payment
Payment -
(purchase of
goods and
services)
Current -
account
balance
Current account of India
Current account
year 1994- 1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

merchandi -9049 -11359 -14815 -15507 -13246 -17841 -12460 -11574 -10690 -13718 -33702 -51904 -63171 -42401
se

invisible 5680 5449 10196 10007 9208 13143 9794 14974 17035 27801 31232 42002 53405 31688
net

current -3369 -5910 -4619 -5500 -4038 -4698 -2666 3400 6345 14083 -2470 -9902 -9766 -10713
account

in us$ million
Current account
Capital account
§ Capital transfers related to purchase and sale of fixed
assets such as real estate.

§ All transactions indicating changes in stock magnitudes


concerning capital receipts and payments capital
account.

§ It relates to :
 Borrowing
 Capital repayment
 Sale of assets
 Change in stock of gold
 Change in reserve for foreign currency

Capital account

year 1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

capital 8013 2974 10437 9393 7867 10840 8409 8357 10640 17338 28629 24954 14594 17538
account

in us$ million
Capital account of India
Thank you