 Export – Credit- Currency Flow

 Import – Deficit- Currency Outflow

 Surplus in BOP – It means the country exports more than its imports. It provides enough
capital to pay for all domestic production.
 Default in DOP- It means the country imports more goods, services and capital than its
exports. It must borrow from other countries to pay for its imports.
 Capital Account is used to
1. Finance deficit in current account
2. Absorb surplus of current account

Capital Account is concerned with financial transfers. So, it does not have direct effect on
income and employment of the country.

Hence in the time period of Oct- Dec 2018 Capital Account is deficit with 76 which means, it
indicates net outflow of capital.

 Construction
In this data, construct is more credit which means inflow of currency but investing more in
abroad fore the construct over their that means giving more Indian currency to the abroad
which is not good for the economy current purposes.

Theoretically, the current account balance should be zero, but, in the real world, this is impossible. If
the current account has a surplus or a deficit, it tells us something about the government and state
of the economy. Hence, in the time period of October to December 2018, import is more than the
export i.e 16900 which is current account deficit which reflects a government and an economy that
is a net debtor to the rest of the world. It is investing more than it is saving and is using resources
from other economies to meet its domestic consumption and investment requirements.

This account covers all the receipts and payments made with respect to raw material and
manufactured goods.

It also includes receipts from engineering tourism, transportation, business services, stocks and
royalties from patents and copyrights, when all the goods and services are combined together, they
make up to a country’s balance of trade.

Hence, here in the date of Oct-Dec 2018 the goods have more deficit balance which means more
imports and whereas services have more credit balance which means more credit or more export i.e
21299.

Also transport have more debit balance which more imports.

 Travel Tourism
International tourism directly affects the BOP as an invisible exports entry. Hence, travel is
having favorable balance, the cost of foreign currency revenues for a country must exceed
the unit of foreign currency expenditures i.e 2520