balance of payment
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TRANSCRIPT
Jeevan SinghKaran Dhandh
K.M.SinghManish GargMehak Seth
Mukul Ahluwalia
PRESENTATION ON POSSIBLE MEASURES TO CORRECT B.O.P
DISEQUILIBRIUM
BOP :
Balance of Payments is a systematic and summary record of a country’s economic and financial transactions with the rest of the world over a period of time
BOP SURPLUS :INDIA's balance of payments surplus was lower by $1.88 billion for Q1 FY 2003 at $ 4.31 billion, as compared to a surplus of $6.19 billion in the same period the previous year
BOP DEFICIT :The trade deficit has increased to $2.7 billion from $2.3 billion in the quarter as merchandise exports and imports being at $14.6 billion and $17.3 billion (on the payment basis) as compared to $12.3 billion and $14.6 billion in the corresponding period in the previous year
Automatic Correction Flexible exchange rate Fixed exchange rate Price Adjustments Interest Rate Adjustment Income Adjustments
Monetary Measures Monetary Contraction Devaluation Exchange Control
Trade Measures
Absorption
BOP is determined by how much is produced and how much is consumed
When internal consumption surpasses national income a current account deficit will result
During economic expansions both income and absorption will increase.
Governments have incentives to fiddle with absorption by:
changing the volume of the government expenditures
limiting the absorption of the economy through taxes
Using FOREX Reserves - incase of comfortable forex
External assistances -International Monetary Fund - Commercial borrowings - NRI deposits