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Balance of payment refers to the difference between the total payments out of a country during a
given period of time. These payments are of visible and invisible items.
a) Current Account
It includes export and import of all goods and services and transfer payments on receipts
and payments sides respectively.
b) Capital Account
In capital account, on receipts side, short term and long-term capital inflow receipts of
foreign direct investment and foreign debts are posted. Same items are written in payment side
while making payment.
c) Reserve Accounts
It shows the foreign exchange position of a country. Official reserve account has the records
of foreign official holding and increase reserves of gold and foreign currencies.
REPRESENTATION BY SCHEDULE
Situation Reason
Fiscal Year
B. REDUCTION IN IMPORTS
10. Import of Only Essential Items
Only essential items should be imported which are needed for our industrial production.
Import of luxuries should be banned. People should be educated to come out from the complex
of foreign goods.
11. Exchange Control
Exchange control is also an important step to minimize the imports. Exchange control
should be followed, so that there is no wastage of foreign exchange to import of un-necessary
and luxuries.
12. Substitutes for Imported Items
Import substitutes should be manufactured in the country. If home production of fertilizer,
paper, steel, edible oil and electrical goods are increased, there will be less need for such
imports.
C. MISCELLANEOUS
13. Decrease in Consumption
Taxes should be imposed to reduce the consumption of many items. Rich people in our
country are spending freely on unnecessary imported consumer items. So, foreign exchange
reserves are wasted.
14. Control of Smuggling
Bara markets should be eliminated. After atomic explosion, the Govt. is taking strict
measures to eliminate markets of smuggled goods.
15. Population Control
Many of our problems are arising due to fast increase in population. Sincere efforts
should be made to decrease growth rate of population. People should be educated in this
regard.
Conclusion:
Achievement of surplus in balance of payment is difficult but not impossible. It can
achieve through installing import substitution and export promoting industries. Government
should control the forex and check the import of luxuries.