Documenti di Didattica
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Payments
Presented by
Dr. Rohit Tomar
Contents
Meaning
Objective
Characteristics
Structure
Components
Balance of payments Surplus and Deficit
Ways of Measuring of Deficit and Surplus
Meaning of disequilibrium in balance of payments
Causes of disequilibrium in balance of payments
Measures to correct disequilibrium in Balance of
Payments
Balance of Payments
A record of
international
transactions
between
residents of one
country and the
rest of the world
Objective
Its main objective is to represent the
economic position of a country,
whether its currency is rising or
falling in its external value.
Characterstics of Balance
of Payments
It is statement having two sides.
It is a record of economic transaction.
It shows a relation between receipts
& payments.
Visible & Invisible items both are
included in this statement.
It is prepared for a certain period of
time.
Structure of balance of
payments accounts
The balance of payments account of
a country is based on the principle of
double-entry book-keeping.
Each transaction is entered on the
credit and debit side of statement.
But balance of payments accounting
differ from business accounting in
one respect. In business accounting,
debit(-) are shown on the left side
Continue.
and credits (+) on the right side of
statement . But in the balance of
payments accounting, debits are shown
on the right side and credits on the left
side of the statement. For example:
When a payment is received from a
foreign country, it is a credit
transaction while payment to a foreign
country is a debit transaction.
Components of Balance of
payments
Current Account
Capital Account
Official Account
Current Account- The current
account of a country consists of all
transactions related to trade in
goods and services and unilateral
transfers.
Continue
Capital Account- The capital account
of a country consist of its transaction
in financial assets in the form of
short-term and long-term lending
and borrowing.
Continue.
Official Settlement Account
In fact it is a part of capital account.
But in UK and USA balance of payments
accounts shows as a separate account.
It measures the change in nations
liquid and non liquid liabilities to
foreign official holders and the change
in nations official reserve assets.
Table. Balance of Payments
account
Credits(+) (Receipts) Debits(-)Payments
Current Account
Exports Imports
(a) Goods Goods
(b) Services Services
(c) Transfer payments Transfer payments
Capital Account
Borrowing from Lending to Foreign Countries
Foreign countries
Direct Investments
By Foreign countries Direct Investments in Foreign
countries
Official Settlements Account
Increase in Foreign Official Holdings Increase in Official Reserve
of Gold and Foreign
Currencies
Errors and Omissions
Major items of Indias
Balance of Payments (US$
Million) 2007-08(PR) 2008-09(P) April-Dec(2008-09)
(PR)
April-Dec(2009-2010)
(P)