Balance Of Payment

Jeevan SinghKaran Dhandh

K.M.SinghManish GargMehak Seth

Mukul Ahluwalia

PRESENTATION ON POSSIBLE MEASURES TO CORRECT B.O.P

DISEQUILIBRIUM

BOP :

Balance of Payments is a systematic and summary record of a country’s economic and financial transactions with the rest of the world over a period of time

BOP SURPLUS :INDIA's balance of payments surplus was lower by $1.88 billion for Q1 FY 2003 at $ 4.31 billion, as compared to a surplus of $6.19 billion in the same period the previous year

BOP DEFICIT :The trade deficit has increased to $2.7 billion from $2.3 billion in the quarter as merchandise exports and imports being at $14.6 billion and $17.3 billion (on the payment basis) as compared to $12.3 billion and $14.6 billion in the corresponding period in the previous year

Automatic Correction Flexible exchange rate Fixed exchange rate Price Adjustments Interest Rate Adjustment Income Adjustments

Monetary Measures Monetary Contraction Devaluation Exchange Control

Trade Measures

Absorption

BOP is determined by how much is produced and how much is consumed

When internal consumption surpasses national income a current account deficit will result

During economic expansions both income and absorption will increase.

Governments have incentives to fiddle with absorption by:

changing the volume of the government expenditures

limiting the absorption of the economy through taxes

Using FOREX Reserves - incase of comfortable forex

External assistances -International Monetary Fund - Commercial borrowings - NRI deposits