UNIVERSITY OF MYSORE

SIR. M. VISHWESHWARAIAH POST GRADUATE CENTER

DEPARTMENT OF ECONOMICS

SEMINOR TOPIC : BALANCE OF PAYMENT

SUBMITTED TO Submitted By
DR. HARINI Mam SANJAY KUMAR .S
Assistant proffessor 1st YAER M.A
Sir M.V. P.G Center Sir.M.V.P.G CENTER
Tubinakere Mandya Tubinakere Mandya
 INTRODUCTION

BALANCE OF PAYMENT

“ The Balance of payment of a country is a systematic record of

all economic transactions between the residents of one
country and residents of foreign countrys during a given
period of time “
 BALANCE OF PAYMENT
• The balance of payments (BOP) Record the transactions in
goods ,services and assets between residents of a country with the
rest of the world

•
• IT INCLUDES : value of goods exported and imported that is
visible items and invisible items and capital transactions
ECONOMIC TRANSACTIONS IN BOP

VISIBLE ITEMS INVISIBLE ITEMS

SERVICES EXPORTED AND

 ALL TYPES OF PHYSICAL
IMPORTED
GOODS IMPORTED AND
EXPORTED

C A P I TA L A S S E T S
U N I L AT E R A L TRANSFERS
TRANSFERS
SITUATION BALANACE OF PAYMENT

DEFICIT = DEBIT > CREDIT

BALANCE = DEBIT = CREDIT

SURPLUS = DEBIT < CREDIT

INDEX

DEBIT MEANS EXPORT

(OUT FLOW )

CREDIT MENS IMPORT

(INFLOW )
BALANCE OF PAYMENT STRUCTURE
VISIBLE ITEMS

CURRENT INVISIBLE ITEMS

ACCOUNT
UNILATERAL

CAPITAL ACCOUNT
CAPITAL ASSETS TRANSACTIONS
 BOP COMPONENTS
CURRENT ACCOUNT
•Statement of a actual receipts and payments relating to
export and import of goods and services and unilateral
transfers during a year .

COMPONENTS OF CURRENT ACCOUNT

• EXPORT AND IMPORT OF VISIBLE ITEMS
•EXPORT AND IMPORT OF INVISIBLE ITEMS
•UNILATERAL TRANSFERS ( Transfer between
resident & non resident gifts, donations )
 CAPITAL ACCOUNT
• Recordscapital transactions such as loans and
investments between one country and rest of the
world

CO M P O N E N T S O F C A PI TA L ACCO U N T
• FO R E I G N I N V E ST M E N T
• B O R ROW I N G S
• O F F I C I A L I N T E R N AT I O N A L R E S E RV E S
 BALANCE OF PAYMENT CAUSES
•ECONOMIC FACTORS
•INFLATION
•EXPENDITURE ON DEVELOPING RELATIONS
•FALL IN DEMAND
•IMPORTS SERVICES

SOCIAL FACTORS
•DEMONSTRATION EFFECT

• POLITICAL FACTORS
• POLITICAL INSTABILITY HAS ADVERSE EFFECT
ON BOP
EFFECTS OF DISEQUILIBRIUM
• REDUCES THE FOREIGN EXCHANGE R ESORVES OF A
COUNTRY

• SLOWS THE PACE OF ECONOMIC DEVELOPMENT

• ECONOMIC CREDIBILITY IS HAMPERED

• FOREIGN DEPENDENCE MAY TAKE OF POLITICAL

DEPENDENCE
 CONCLUSION

• The balance of payment situation started improving since

1993-93 there was a satisfactory balance of payment position
in that period : the reasons are
 THANK YOU
SPECIAL THANKS FOR
HARINI MAM
Assistant professor
SIR.M.V.P.G CENTER TUBINAKERE MANDYA
GIVING FOR SUCH WONDERFUL OPPORTUNITIES