Presented by:

Harsh Jain, M. Deepak, Ashok Jaiswal

 A balance of payment account is a statement of double entry system of record of all economic transactions( involving foreign payments) between residents of a country and the rest of the world carried out in specific period of time. Accounting framework and statistical record of all the economic and Financial flows that take place over a specified time period between residents of the reporting country and rest of the world.

 It provides data for economic analysis.  It reveals strong and weak points of a countrys foreign trade relations.  It provides indication of future repercussions of countrys past trade performances.  It reveals changes the composition & magnitude of foreign trade.

CURRENT ACCOUNT
Visible items

CAPITAL ACCOUNTS
Short-term capital movement

Invisible items

Long-term capital movement

Unrequited transfers

Change in stock of gold & Reserves of Foreign Exchange

 All transactions relating to goods, services and unrequited transfers constitute current account. Flow of items pertaining to specific period of time. Visible goods is also known as tangible goods which we can see like goods. Invisible goods is also known as intangible goods which we cant see but we can feel like services.

Transaction
1.Merchandise 2.Foreign table 3.Transportation 4.Insurance premium 5.Investment income 6.Government (purchase of goods and services) Current account balance

Credit
Export Earning Earning Receipt Dividend receipt Receipt

Debit
import Payment Payment Payment Dividend payment Payment

Net balance
-

15000

10000

5000

in us$ million 0 current account

-5000

-10000

-15000

year

1994- 1995

1995-1996

1996-1997

1997-1998

1998-1999

1999-2000

2000-2001

2001-2002

2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

2007-2008

merchandi se

-9049

-11359

-14815

-15507

-13246

-17841

-12460

-11574

-10690

-13718

-33702

-51904

-63171

-42401

invisible net

5680

5449

10196

10007

9208

13143

9794

14974

17035

27801

31232

42002

53405

31688

current account

-3369

-5910

-4619

-5500

-4038

-4698

-2666

3400

6345

14083

-2470

-9902

-9766

-10713

in us$ million

60000

40000

20000

0 invisible net merchandise -20000

-40000

-60000

-80000

 Capital transfers related to purchase and sale of fixed assets such as real estate.  All transactions indicating changes in stock magnitudes concerning capital receipts and payments capital account.  It relates to : Borrowing Capital repayment Sale of assets Change in stock of gold Change in reserve for foreign currency

year

1994-1995 1995-1996 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008

capital account

8013

2974

10437

9393

7867

10840

8409

8357

10640

17338

28629

24954

14594

17538

in us$ million

10000

15000

20000

25000

30000

35000

5000

0 1994-95 1995-96 1996-97 1997-98 1998-99

capital account of india (in us$ million)

1999-2000

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

THANK YOU