BALANCE OF PAYMENTS
Group 12
Dilip K
Ahmed Mudassar P B
Atul Pal
Jacob George
WHAT IS BOP?
A balance of payments (BOP) sheet is an
accounting record of all monetary transactions
between a country and the rest of the world.
These transactions include payments for the
country’s exports and imports of goods, services,
and financial capital, as well as financial
transfers.
Composition of the balance of
payments sheet
Since 1974, the two principal divisions on the BOP
have been the current account and the capital account.
BOP = Current A/C – Capital A/C + - Balancing item
Current A/C - It is the sum of the balance of trade (net
earnings on exports – payments for imports), factor
income (earnings on foreign investments – payments
made to foreign investors) and cash transfers.
Capital A/C - It includes the reserve account (the
international operations of a nation's central
bank), along with loans and investments between
the country and the rest of world.
Balancing Item – It is simply an Amount that
accounts for any statistical errors & assures that
the current & capital accounts sum to zero.
History of balance of payments issues
Pre-1820: Mercantilism
1820–1914: Free trade
1914–1945: Deglobalisation
1945–1971: Bretton Woods
1971–2009: Transition, Washington Consensus,
Bretton Woods II
2009 and later: Post Washington Consensus
Competitive devaluation after 2009
TRENDS & PROBLEMS OF INDIA’S
BALANCE OF PAYMENT (1949-2000)
Protectionist policies
External Debt
Export promotion
Exchange rate
New Economic Policy
TRENDS IN INDIA’S BOP (2000-
2010)
Foreign Investment
Foreign Exchange Reserves
Exchange Rate
Current Account of BOP
BOP 2008-09 & 2009-10 INDIA
Sl Particulars 2008-09 2009-10
no. US Million $ US Million $
1. Current Account -27915 -38383
2. Capital Account
1. Foreign Investment
a. FDI 19816 18771
b. FII -14031 32396
2. Loans 8318 13259
3. Banking Capital -3246 2084
4. Other Capital -3990 -13016
Total 6768 53397
3. Errors & Omissions 1067 -1573
4. Overall Balance -20080 13441
CURRENT ACCOUNT DETAILS 2009-2010 - INDIA
Particulars 2008-09 - US Million $ 2009-10 - US Million $
CURRENT ACCOUNT
I. MERCHANDISE -119,520 -118,374
[Link] (a+b+c) 91,605 79,991
a) Services 53,916 35,726
i) Travel 1,469 2,517
ii) Transportation -1,509 -757
iii) Insurance 292 317
iv) G.n.i.e. -404 -86
v) Miscellaneous 54,070 33,735
of which
Software Services 43,736 48,236
Business Services 3,286 -6,681
Financial Services 1,470 -907
Communication
Services 1,211 -126
b) Transfers 44,798 52,305
i) Official 232 250
ii) Private 44,567 52,055
c) Income -7,110 -8,040
i) Investment Income -6,626 -7,249
ii) Compensation of Employees -484 -791
Total Current Account (I+II) -27,915 -38,383
INDIA
2005 2006 2007 2008 2009
(In US $ )
CURRENT - - - - -
ACCOUNT 10,283,543,30 9,299,060,317 8,075,694,484 27,915,104,30 38,382,761,17
BALANCE 8 4 1.
FOREIGN 7,606,425,242 20,335,947,44 25,127,155,85 41,315,303,44 34,577,177,46
DIRECT 8 2 7 8
INVESTMEN
TS
PORTFOLIO 12,151,206,54 9,509,114,658 32,862,817,21 - 21,111,850,03
EQUITIES 8 7 15,029,184,81 9
NET 5
INFLOWS
ROYALTIES 671,829,366. 845,949,436. 1,159,824,391 1,528,826,913 1,860,283,808
AND FEES . . .
PAYMENTS 205,974,584 60,913,260 163,126,497 147,815,443 192,555,770
AND
RECEIPTS
USA
2005 2006 2007 2008 2009
(in US $)
CURRENT - - - - -
ACCOUNT 747,594,600,4 802,640,077,0 718,095,038, 668,858,621, 378,434,537,
BALANCE 77 00 000 000 000
FOREIGN 112,638,000, 243,151,000,0 271,211,000, 328,334,000, 134,710,000,
DIRECT 000 0 000 000 000
INVESTME
NTS
PORTFOLIO 89,258,000,0 145,482,000,0 275,617,000, 126,396,000, 160,534,000,
EQUITIES 00 00 000 000 000
NET
INFLOWS
ROYALTIES 24,612,000,00 23,519,000,00 24,931,000,0 25,781,000,0 25,230,000,0
AND FEES 0. 0. 00. 00. 00.
PAYMENTS
AND 64,395,000,00 70,727,000,00 84,580,000,0 93,920,000,0 89,791,000,0
RECEIPTS 0 0 00 00 00.
US Trade deficit
In 2009, the U.S. imported over $253 billion in petroleum-
related products while only exporting $49 billion. This oil-
related deficit of $204 billion was over half of the total 2009
trade deficit of $380.7 billion.
Consumer products:In 2009, the U.S. ran a $103 billion
deficit, importing $253 billion while only exporting $150
billion.
Services :It exported $507 billion while importing only $371
billion. This caused a surplus of $136 billion.
US EXPORTS:33 % to Canada and Mexico, 15 % to Japan
,China U.K.
US IMPORTS:33% from Canada and China,10 % from
Mexico ,Japan ,Germany .
2005 2006 2007 2008
CHINA
2009
(IN US $)
CURRENT 160,818,310,5 253,267,862,3 371,832,620,1 436,107,395,0 297,142,047,9
ACCOUNT 53 59 15 63 69
BALANCE
FOREIGN 79,126,731,41 78,094,665,75 138,413,185,2 147,791,063,8 78,192,727,41
DIRECT 3 1 03 22 3
INVESTMEN
TS
PORTFOLIO 20,346,000,00 42,861,200,00 18,509,607,49 8,721,011,173 28,160,664,46
EQUITIES 0 0 3 3
NET
INFLOWS
ROYALTIES 5,321,253,863 6,634,081,020 8,192,067,402 10,319,466,35 11,065,271,08
AND FEES . 6. 2.
PAYMENTS 157,401,786 204,503,785 342,634,075 570,536,223 429,452,520
AND
RECEIPTS
China trade Surplus.
In 2009. Current account surplus: $297.1 Bln
Goods account surplus : $249.5 Bln.
Income account surplus: $ 43.3 Bln.
Current transfer surplus : $33.7 bln.
Service account deficit : $ 29.4 Bln. Transportation: $ 23 bln
Patent fees: $ 10.6 bln
Insurance services:$ 9.7 bln
Tourism : $4 bln.
Surplus is also influenced by:
Factors of production.
Undervaluation of currency.
China exports to : EU ,USA and Honk Kong (around 50 %)
China Imports from:Japan (12- 14%),EU, ASEAN ,South korea ,Taiwan
RUSSIA
2005 2006 2007 2008 2009
(IN US $ )
CURRENT 84,602,174,30 94,686,391,30 77,768,325,30 103,660,704,7 49,432,638,88
ACCOUNT 0 0 0 00 9
BALANCE
FOREIGN 12,885,807,50 29,701,427,10 55,073,197,80 75,002,416,00 36,750,625,00
DIRECT 0 0 0 0 0
INVESTMEN
TS
PORTFOLIO -99,849,700 6,479,706,600 18,674,599,50 - 3,369,014,500
EQUITYS 0 15,005,353,90
(net inflows) 0
ROYALTIES 1,593,210,000. 2,002,100,000. 2,806,130,000 4,594,540,000 4,106,950,000
AND FEES 260,200,000 299,270,000 . . .
PAYMENTS 396,360,000 453,360,000 493,670,000
AND
RECEIPTS
