Sei sulla pagina 1di 29

BALANCE OF PAYMENT

OF INDIA

Presented by-
RANJIT SHETTY 31

MAMTA BIST 04
WHAT IS BOP ?
 The balance of payments accounts are those
that record all transactions between the
residents of a country and residents of all
foreign nations.
 The BOP is determined by the country's
exports and imports of goods, services, and
financial capital, as well as financial
transfers.
 It reflects all payments and liabilities to
foreigners (debits) and all payments and
obligations received from foreigners (credits).
 Balance of payments is one of the major
indicators of a country's status in
BOP CONSISTS OF
 The Current Account

 The Capital Account

 Official Reserves Account

 Errors and Ommisions


CURRENT ACCOUNT
 Includes all imports and exports of goods and
services.
 Includes unilateral transfers of foreign aid.

 If the debits exceed the credits, then a


country is running a trade deficit.
 If the credits exceed the debits, then a
country is running a trade surplus.
CURRENT ACCOUNT
1. Export & Import of Merchandise & Services

3. Income Account
(The income account accounts mostly for
investment income from dividends and
interest on credit and payments on foreign
taxes.)
5. Transfer payment
(Grants received / given, Pvt.Transfer)
CAPITAL ACCOUNT
1. Foreign Investment(FDI, FII)
2. Banking Capital (NRI Deposits)
3. Short term credit
4. External Commercial Borrowings(ECB)
CAPITAL ACCOUNT
 If foreign ownership of domestic financial
assets has increased more quickly than
domestic ownership of foreign assets in a
given year, then the domestic country has a
capital account surplus.
 On the other hand, if domestic ownership of
foreign financial assets has increased more
quickly than foreign ownership of domestic
assets, then the domestic country has a
capital account deficit.
OFFICIAL INTERNATIONAL RESERVES
 The official international reserve account
records the change in stock of official
international reserve assets (also known
as foreign exchange reserves) at the
country's monetary authority .

 Official reserves assets include gold reserves,


foreign currencies, SDRs, reserve positions
in the IMF.
 {Special Drawing Rights (SDRs) are potential
claims on the freely usable currencies of IMF
members.}
 
NET ERRORS AND OMISSIONS

 This is the last component of the balance of


payments and principally exists to correct
any possible errors made in accounting for
the three other accounts

 They are often referred to as "balancing


items".
INDIA’S INTERNATIONAL TRADE
INDIA’S MAJOR TRADING PARTNERS
INDIA’S TRADE BASKET
APRIL – JUNE QUARTER 2008-09
(IN US $ BILLION )
Items April-June 08 April-June 07 Jul-Sept 08 Jul-Sept 07
(US $ BILLION)

I. Current Account -10.7 -6.3 -12.5 -4.3

II Capital Account (net) (a to f) 12.9 17.5 7.8 33.5


.
a.Foreign Investment (i+ii) 5.9 10.1 4.3 13
(i) Foreign Direct 10.1 2.6 5.6 2.1
Investment
(ii) Portfolio Investment -4.2 7.5 -1.3 10.9
b.Banking Capital 2.7 -0.9 2.1 6.6
of which: NRI Deposits 0.8 -0.4 0.3 0.4
c.Short-Term Credit 2.2 1.8 NA NA
d.External Assistance 0.3 0.2 NA NA
e.External Commercial 1.6 7.0 1.3 10.9
Borrowings
f.Other items in capital account* 0.2 -0.7 NA NA
II Valuation change 0.2 3.0 NA NA
I.

Total (I+II+III) 2.4 14.2 -4.7 29.2


INDIA’S BOP POSITION DURING THE
1ST HALF OF 2008-09 (APRIL-SEPT)
 Widening of Tr. Deficit resulting in large CAD,
and moderation in capital flows.
 Merchandise trade deficit recorded a sharp
increase during April-November 2008 on
account of higher crude oil prices for most of
the period and loss of momentum in exports
since September 2008.
 Net surplus under invisibles remained
buoyant, (led by increase in software exports
and private transfers.)
 Net capital inflows reduced sharply and have
remained volatile during 2008-09 so far.
……
CONTD
 While the net inward FDI remained buoyant
net outward FDI also remained high during
April-September 2008.
So the gross capital inflows were higher on
account of higher FDI inflows and NRI
deposits during the period.

 The revised short-term debt maturing up to


March 2009, was estimated at around US $
85 billion as at end-March 2008.
….
CONTD
 India’s merchandise exports during April-Nov
2008 increased by 18.7 % while imports
recorded a higher growth of 32.5 %, largely
due to the rise in (POL) imports.
The rise in oil imports was primarily due to
the elevated international crude oil prices,
while the volume of oil imports moderated.
EXPORTS

 Decline in exports
1.1% drop to $ 12.7 billon in Dec 08
12.1% drop in Oct 08
9.9% drop in Nov 08

 22% drop in Jan 09

 Decline of exports in following sectors: (Dec


08)
Handicraft & Handlooms 64%
Textile 13%
Gems & Jewellery 21%
EXPORTS
 Increase in exports
Eng. Goods, Phama & Agri. Products
(in the range of 19-25%)

 India’s estimated exports $ 170 billion FY


08-09
$ 160 billion FY 07-08
Govt set target $ 200 billion
IMPORTS
 Imports grew by 8.8% to $ 20.25 b in Dec 08
Non oil imports 30.9% to $15.54 b
(consisting of Capital Equipment & Proj.
Goods)
This suggests a robust domestic activity.
TRADE DEFICIT
 $ 7.57 Billion in Dec 08
$ 10.07 Billion in Nov 08

 Tr. Deficit for 1st 9 months is $ 93.8 billion


(74% higher than S 58.98 b in the year ago
period )

 Lower Oil Imports over Jan- Mar will enable to


end this fiscal with a Tr. Deficit of about 40%
higher than last year’s.
INWARD REMITTANCES
 Indicated to touch $ 40 billion in year 2008
(World Bank projection was $ 30 billion )

 In 2007, No. 1 was India (27 billion)


No.2 was China (25.7 billion)

 Unlike FIIs flows, inward remittances are


considered to be extremely sticky
 Mostly from Blue collar workers(not more
than
$ 500 per month)
FOREX RESERVES

 Import cover of India’s foreign exchange


reserves declined to 11.2 months as at end-
September ‘08 as against 14.4 months as
at end-March ‘08 in sync with the fall in
reserves, the RBI said in its half-yearly report
on forex reserves.

 As of January 16, 2009, foreign exchange


reserves at US $ 252.2 billion declined by
US $ 57.5 billion over the level at end-March
2008
ECB & FCCB
 Even after Indian govt. relaxed overseas
borrowing norms for corporates, loans have
failed to pick up.(as foreign banks curb
lending)
 During Oct- Dec 2008, inflows through ECB &
FCCB were only $ 4.5 b against $ 8.1 b in
Oct –Dec 2007

 Borrowings through ECB & FCCBs dipped


32% in 2008.
Indian companies borrowed $ 22.7 b during
the year as compared to $33.1 b in 2007
THE GLOBAL SCENE

 Commodity & oil prices have come down

 Subprime crisis
IS INDIA HEADING TOWARDS BOP
CRISIS OR NOT ?
 What is BoP crisis
 Sufficient Forex Reserves

 Volatility of FII
FACTORS IMPACTING BOP
 Trade Agreement
 Trade Policy

 Currency Exchange Rate

 Tax , Tariff and Trade Barriers


IMPACT OF STIMULUS PACKAGE
 Trade Interest
 Interest subversion

 Exemption of Tax
MEASURES FOR MAKING BOP
FAVOURABLE
 Diversification of Trade
 Development of New Industries

 Concentrate on selected sectors

 Concentrating on Frugal engineering skills

 Incentives related to Trade


Thank
You

Potrebbero piacerti anche