BOP Components: Current Account, Capital Account and Reserve Account; Disequilibrium of BOP; Factors Affecting BOP and Methods of Correcting BOP Disequilibrium
Fiscal Policy trends in India: Since IndependenceKashyap Shah
The document discusses India's fiscal policy trends from post-independence to present day. It summarizes that early on, fiscal policy focused on stimulating growth and reducing inequality through high government expenditure and taxation. This led to budget deficits. Economic reforms since 1991 have focused on reducing deficits through tax cuts, expenditure reforms, and greater fiscal responsibility. The Fiscal Responsibility and Budget Management Act of 2003 aimed to further improve fiscal discipline.
- India's foreign trade can be traced back to the Indus Valley civilization. The 1991 reforms aimed to liberalize trade and attract foreign investment.
- The direction of India's trade refers to its major export and import partners. Exports have diversified to many countries. Major import sources are European countries.
- The composition of trade analyzes product groups. Exports have diversified from primary goods to manufactured goods. Imports now include more capital goods and industrial inputs.
- The balance of trade is favorable if exports exceed imports, and unfavorable if imports exceed exports. The balance of payments includes current accounts like trade plus capital and financial flows. India has recently experienced a lower trade deficit and falling exports and imports
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
1) Industrial growth in India increased since independence, but faced challenges like weak infrastructure and lack of government intervention initially.
2) The first two Five-Year Plans aimed to develop industries in the public sector and allocate public resources.
3) Various industrial policies and controls were implemented to regulate growth, including licensing, import/export controls, and allocation of credit and raw materials.
4) Industrial growth accelerated in the 1980s due to policy shifts, but slowed from the mid-1960s to the late 1970s due to constraints like slow agricultural growth and infrastructure bottlenecks.
The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)
FEMA came into act on the 1st day of June,2000
49 sections in the Act.
The document discusses India's economic policies before and after 1991. Prior to 1991, India followed a socialist model with a large public sector, import substitution, and strict regulations. This led to low growth, shortages, and a balance of payments crisis by 1991. India was forced to seek IMF/World Bank loans in exchange for reforms. The 1991 New Economic Policy introduced liberalization, privatization, globalization and stabilization measures. Key reforms included industrial deregulation, opening the economy to foreign trade and investment, tax cuts, and allowing private sector growth. The reforms aimed to make the Indian economy more competitive and efficient but were criticized for not sufficiently reducing inequality or boosting agriculture/industry.
This document discusses accounting standard 9 regarding revenue recognition. It defines revenue as the gross inflow of cash or receivables from the sale of goods, rendering of services, or use of enterprise resources by others. Revenue is recognized when it is earned and realizable, following the revenue recognition and matching principles. The standard provides criteria for revenue recognition such as evidence of an arrangement, delivery, fixed pricing, and collectability. It also discusses types of revenue recognition for different transactions and the effect of uncertainties.
The document discusses the Foreign Exchange Regulation Act (FERA) of 1973 and its replacement by the Foreign Exchange Management Act (FEMA) of 1999. Some key points:
- FERA was introduced in 1973 during an economic crisis to conserve foreign exchange resources by regulating foreign transactions. However, over time it became too restrictive as the economy liberalized.
- FEMA was introduced in 1999 to replace FERA and bring foreign exchange laws in line with India's increasingly open economy. It removed many restrictions and made rules simpler to encourage foreign investment.
- While both acts aimed to regulate foreign exchange, FERA did so in a more controlling way through criminal penalties, whereas FEMA takes a milder
Fiscal Policy trends in India: Since IndependenceKashyap Shah
The document discusses India's fiscal policy trends from post-independence to present day. It summarizes that early on, fiscal policy focused on stimulating growth and reducing inequality through high government expenditure and taxation. This led to budget deficits. Economic reforms since 1991 have focused on reducing deficits through tax cuts, expenditure reforms, and greater fiscal responsibility. The Fiscal Responsibility and Budget Management Act of 2003 aimed to further improve fiscal discipline.
- India's foreign trade can be traced back to the Indus Valley civilization. The 1991 reforms aimed to liberalize trade and attract foreign investment.
- The direction of India's trade refers to its major export and import partners. Exports have diversified to many countries. Major import sources are European countries.
- The composition of trade analyzes product groups. Exports have diversified from primary goods to manufactured goods. Imports now include more capital goods and industrial inputs.
- The balance of trade is favorable if exports exceed imports, and unfavorable if imports exceed exports. The balance of payments includes current accounts like trade plus capital and financial flows. India has recently experienced a lower trade deficit and falling exports and imports
The 1991 Indian balance of payments crisis occurred due to a combination of factors: a large current account deficit caused by rising oil prices after the Gulf War, declining exports, and a withdrawal of foreign capital. India's foreign exchange reserves fell dangerously low, forcing the government to undertake major economic reforms, including currency devaluation, trade liberalization, and industrial deregulation. In the following decades, these reforms helped stabilize the economy and shift to a market-oriented policy framework, leading to strong growth in foreign investment, exports, and overall macroeconomic indicators. However, some slowing was seen in the late 1990s due to global trade declines.
1) Industrial growth in India increased since independence, but faced challenges like weak infrastructure and lack of government intervention initially.
2) The first two Five-Year Plans aimed to develop industries in the public sector and allocate public resources.
3) Various industrial policies and controls were implemented to regulate growth, including licensing, import/export controls, and allocation of credit and raw materials.
4) Industrial growth accelerated in the 1980s due to policy shifts, but slowed from the mid-1960s to the late 1970s due to constraints like slow agricultural growth and infrastructure bottlenecks.
The FEMA (1999) or in short FEMA has been introduced as a replacement for earlier Foreign Exchange Regulation Act (FERA)
FEMA came into act on the 1st day of June,2000
49 sections in the Act.
The document discusses India's economic policies before and after 1991. Prior to 1991, India followed a socialist model with a large public sector, import substitution, and strict regulations. This led to low growth, shortages, and a balance of payments crisis by 1991. India was forced to seek IMF/World Bank loans in exchange for reforms. The 1991 New Economic Policy introduced liberalization, privatization, globalization and stabilization measures. Key reforms included industrial deregulation, opening the economy to foreign trade and investment, tax cuts, and allowing private sector growth. The reforms aimed to make the Indian economy more competitive and efficient but were criticized for not sufficiently reducing inequality or boosting agriculture/industry.
This document discusses accounting standard 9 regarding revenue recognition. It defines revenue as the gross inflow of cash or receivables from the sale of goods, rendering of services, or use of enterprise resources by others. Revenue is recognized when it is earned and realizable, following the revenue recognition and matching principles. The standard provides criteria for revenue recognition such as evidence of an arrangement, delivery, fixed pricing, and collectability. It also discusses types of revenue recognition for different transactions and the effect of uncertainties.
The document discusses the Foreign Exchange Regulation Act (FERA) of 1973 and its replacement by the Foreign Exchange Management Act (FEMA) of 1999. Some key points:
- FERA was introduced in 1973 during an economic crisis to conserve foreign exchange resources by regulating foreign transactions. However, over time it became too restrictive as the economy liberalized.
- FEMA was introduced in 1999 to replace FERA and bring foreign exchange laws in line with India's increasingly open economy. It removed many restrictions and made rules simpler to encourage foreign investment.
- While both acts aimed to regulate foreign exchange, FERA did so in a more controlling way through criminal penalties, whereas FEMA takes a milder
The document provides an overview of foreign capital in India. It discusses the different types of foreign capital including foreign aid, private foreign investment, foreign direct investment, and foreign portfolio investment. It notes that foreign capital plays an important role in the early stages of a country's industrialization by increasing resources, undertaking risks, providing technical know-how, setting high standards, facilitating marketing and exports, reducing trade deficits, and increasing competition. The document also discusses India's pre-liberalization period and the need for foreign capital to supplement domestic investment and speed up economic development.
The International Monetary Fund (IMF) was conceived in 1944 and established in 1945 with 45 founding member countries. The IMF works to improve the economies of its member countries and oversees the global financial system by monitoring members' macroeconomic policies. It aims to stabilize international exchange rates and facilitate development through loans that require liberalizing economic policies. The IMF provides short-term loans to countries having balance of payments problems and is headquartered in Washington D.C.
The document discusses India's trade policy reforms from 2008-2019. It provides details on various trade agreements and reforms India has undertaken, including the establishment of free trade areas with ASEAN and other countries. It also analyzes the impact of reforms on India's economy, noting improvements in areas like the trade deficit but that challenges remain like infrastructure development. The document concludes by examining the US-China trade war and its effects on India's exports.
This document provides an overview of the Foreign Exchange Regulation Act (FERA) and the Foreign Exchange Management Act (FEMA) in India.
FERA was introduced in 1973 to conserve foreign exchange reserves during a period of economic challenges. It imposed strict controls on foreign exchange transactions. FEMA replaced FERA in 1999 to liberalize controls in line with India's economic reforms. FEMA aims to facilitate external trade and payments while maintaining an orderly foreign exchange market. It removed many restrictions and simplified rules to encourage greater foreign investment. Key similarities between the acts include regulatory bodies and enforcement powers, while FEMA introduced more flexibility compared to FERA.
The document defines and describes key aspects of a country's Balance of Payments account, including that it is a systematic record of all economic transactions between a country and the rest of the world over a specific period, usually annually. It includes components like the current account, capital account, and errors and omissions. The balance of payments can be in deficit, surplus, or balanced depending on whether receipts are greater than, less than, or equal payments. Countries employ various monetary and non-monetary measures to correct a deficit.
Foreign trade policy india & its impact on indian tradeMegha0000
The document provides an overview of India's foreign trade policy, including key objectives, schemes, and initiatives. Some of the main points covered include:
- The policy aims to double India's share of global trade by 2020 and achieve an export target of $200 billion.
- It introduces new incentive schemes like the Focus Market Scheme and Focus Product Scheme to promote exports.
- Special focus sectors include agriculture, handlooms, gems and jewelry, and electronics.
- The policy aims to encourage technological upgrades, support major exporters, and diversify markets.
The document summarizes the statutory basis and key provisions of foreign exchange regulation in India. [1] The Foreign Exchange Regulation Act of 1973 and subsequent Foreign Exchange Management Act of 1999 form the statutory basis for regulating foreign exchange. [2] FEMA aims to consolidate and amend foreign exchange laws to facilitate trade and maintain an orderly foreign exchange market. [3] Key provisions of FEMA include regulating capital account and current account transactions, duties of authorized foreign exchange dealers, penalties for non-compliance, and establishment of authorities to enforce the act.
The document outlines India's industrial policies since independence. Key policies include the Industrial Policy Resolution of 1948 which accepted a mixed economy with government monopoly in select industries. The 1956 policy emphasized heavy industries and expanding the public sector. The 1973 policy gave preference to small and medium enterprises. The 1980 policy promoted competition and 1991 policy deregulated industry, allowed private sector flexibility, and reduced licensing/controls.
This document provides an overview of fixed and flexible exchange rate systems. It discusses key concepts like the demand and supply of foreign exchange, historical exchange rate regimes like the gold standard and Bretton Woods system, and current regimes including pegged rates, crawling pegs, and target zones. The advantages of fixed exchange rates are outlined as promoting international trade and investment by providing certainty, removing speculative activities, and being suitable for currency areas and developing countries seeking economic stability.
The document summarizes key aspects of India's foreign trade policy for 2015-2020 related to legal framework and trade facilitation. It highlights several initiatives to support new exporters/importers including a hand-holding scheme. It also discusses efforts to streamline processes such as issuing electronic Importer-Exporter Codes, reducing documentation requirements, implementing a single window system, and enabling 24/7 customs clearance. Memorandums of understanding have been signed with states and agencies to share electronic realization certificate data and facilitate refunds.
The document summarizes key aspects of India's foreign trade policy, including details on export and import items. Some highlights include:
1. The Ministry of Commerce and Industry announces India's Export-Import policy every five years to encourage foreign trade and balance of payments.
2. Major export items include live animals, cereals, gems and jewelry, iron and steel. Major import items include crude petroleum, precious stones, machinery, chemicals and electronic goods.
3. The policy focuses on initiatives for key sectors like agriculture, handlooms, handicrafts and gems/jewelry to increase India's share of global trade and employment opportunities.
This document provides an overview of India's industrial policies from 1948 to the present. It discusses the objectives and key features of various industrial policy resolutions enacted over time. The initial resolutions in 1948, 1956, and 1973 focused on expanding public sector involvement and prioritizing basic and strategic industries. Later policies in 1977, 1980, and 1991 aimed to liberalize the economy, encourage private sector growth, and attract foreign investment. The current scenario features fewer licensing requirements and greater openness to trade and globalization compared to earlier policies focused on import substitution and self-reliance.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country. There are several types of FDI including horizontal FDI where a company operates the same activities abroad as at home, and vertical FDI where different stages of production are located in different countries. FDI can be motivated by seeking resources, markets, efficiencies, or strategic assets. It provides benefits like job creation and technology transfer but may also displace domestic companies. India allows FDI through an automatic route without approval for some sectors, and through a government approval process for other sectors regulated for national interest.
The document provides an overview of India's foreign trade policy and its evolution over different phases since independence. It discusses how trade policy was initially used to restrict imports and promote exports to help domestic industries develop. India's trade policy has liberalized over several phases since the 1950s. Major reforms in 1991 substantially eliminated licensing, quotas, and other controls. The current foreign trade policy (2015-2020) aims to further liberalize and simplify trade while promoting exports. It introduces several schemes like Special Economic Zones to encourage trade and manufacturing.
Foreign direct investment (FDI) refers to direct investment into production in another country. FDI is generally preferred over other forms of external financing as it is non-debt creating and returns depend on project performance. India permits FDI through various routes like automatic approval, government approval, or Cabinet Committee approval depending on the sector and investment amount. The top sectors to receive FDI in India are services, construction, and telecommunications. Mauritius, Singapore, and the United States are the top countries investing in India, with Mauritius being the largest source of FDI.
foreign trade as an engine of economic growthMitikaAnjel
Foreign trade acts as an "engine" of economic growth in three key ways: 1) It enlarges a country's market for exports, leading to greater production and utilization of resources; 2) Expanding exports provides more employment opportunities and economies of scale, lowering costs; 3) Access to global markets encourages innovation as businesses compete with international counterparts, improving efficiency and productivity. For example, the opening of the Suez Canal increased India's exports of commercial crops like cotton and tea, fueling economic growth. Export processing zones also create jobs and incomes, stimulating demand and further domestic manufacturing. Overall, specialization, competition and technological adoption spurred by foreign trade can power economic expansion.
The document discusses production functions and their key characteristics. It defines production functions and provides examples. There are two main types of production functions - fixed proportions and variable proportions. The law of variable proportions describes the relationship between inputs and output when varying one input while holding others constant. In the short run, marginal returns initially increase, then diminish and eventually become negative. In the long run, all inputs are variable and production isoquants illustrate input combinations producing the same output level. Assumptions of production functions include perfect divisibility and substitution between factors.
A fantastic PPT on balance of payments. The PPT includes a complete of the meaning and various concepts of balance of payments. It also discusses about the type of transactions recorded in BOP and various types of accounts.
This document provides information about balance of payments (BOP) including:
- BOP is a systematic record of all economic transactions between a country and rest of world, including exports/imports of goods and services, as well as capital and financial flows.
- It has two main components - the current account which covers trade in goods and services, and the capital account which covers financial flows. It also includes unilateral transfers.
- A country aims to maintain a balanced BOP through various monetary and non-monetary policy measures that can influence exchange rates, imports/exports, and capital flows.
The document provides an overview of foreign capital in India. It discusses the different types of foreign capital including foreign aid, private foreign investment, foreign direct investment, and foreign portfolio investment. It notes that foreign capital plays an important role in the early stages of a country's industrialization by increasing resources, undertaking risks, providing technical know-how, setting high standards, facilitating marketing and exports, reducing trade deficits, and increasing competition. The document also discusses India's pre-liberalization period and the need for foreign capital to supplement domestic investment and speed up economic development.
The International Monetary Fund (IMF) was conceived in 1944 and established in 1945 with 45 founding member countries. The IMF works to improve the economies of its member countries and oversees the global financial system by monitoring members' macroeconomic policies. It aims to stabilize international exchange rates and facilitate development through loans that require liberalizing economic policies. The IMF provides short-term loans to countries having balance of payments problems and is headquartered in Washington D.C.
The document discusses India's trade policy reforms from 2008-2019. It provides details on various trade agreements and reforms India has undertaken, including the establishment of free trade areas with ASEAN and other countries. It also analyzes the impact of reforms on India's economy, noting improvements in areas like the trade deficit but that challenges remain like infrastructure development. The document concludes by examining the US-China trade war and its effects on India's exports.
This document provides an overview of the Foreign Exchange Regulation Act (FERA) and the Foreign Exchange Management Act (FEMA) in India.
FERA was introduced in 1973 to conserve foreign exchange reserves during a period of economic challenges. It imposed strict controls on foreign exchange transactions. FEMA replaced FERA in 1999 to liberalize controls in line with India's economic reforms. FEMA aims to facilitate external trade and payments while maintaining an orderly foreign exchange market. It removed many restrictions and simplified rules to encourage greater foreign investment. Key similarities between the acts include regulatory bodies and enforcement powers, while FEMA introduced more flexibility compared to FERA.
The document defines and describes key aspects of a country's Balance of Payments account, including that it is a systematic record of all economic transactions between a country and the rest of the world over a specific period, usually annually. It includes components like the current account, capital account, and errors and omissions. The balance of payments can be in deficit, surplus, or balanced depending on whether receipts are greater than, less than, or equal payments. Countries employ various monetary and non-monetary measures to correct a deficit.
Foreign trade policy india & its impact on indian tradeMegha0000
The document provides an overview of India's foreign trade policy, including key objectives, schemes, and initiatives. Some of the main points covered include:
- The policy aims to double India's share of global trade by 2020 and achieve an export target of $200 billion.
- It introduces new incentive schemes like the Focus Market Scheme and Focus Product Scheme to promote exports.
- Special focus sectors include agriculture, handlooms, gems and jewelry, and electronics.
- The policy aims to encourage technological upgrades, support major exporters, and diversify markets.
The document summarizes the statutory basis and key provisions of foreign exchange regulation in India. [1] The Foreign Exchange Regulation Act of 1973 and subsequent Foreign Exchange Management Act of 1999 form the statutory basis for regulating foreign exchange. [2] FEMA aims to consolidate and amend foreign exchange laws to facilitate trade and maintain an orderly foreign exchange market. [3] Key provisions of FEMA include regulating capital account and current account transactions, duties of authorized foreign exchange dealers, penalties for non-compliance, and establishment of authorities to enforce the act.
The document outlines India's industrial policies since independence. Key policies include the Industrial Policy Resolution of 1948 which accepted a mixed economy with government monopoly in select industries. The 1956 policy emphasized heavy industries and expanding the public sector. The 1973 policy gave preference to small and medium enterprises. The 1980 policy promoted competition and 1991 policy deregulated industry, allowed private sector flexibility, and reduced licensing/controls.
This document provides an overview of fixed and flexible exchange rate systems. It discusses key concepts like the demand and supply of foreign exchange, historical exchange rate regimes like the gold standard and Bretton Woods system, and current regimes including pegged rates, crawling pegs, and target zones. The advantages of fixed exchange rates are outlined as promoting international trade and investment by providing certainty, removing speculative activities, and being suitable for currency areas and developing countries seeking economic stability.
The document summarizes key aspects of India's foreign trade policy for 2015-2020 related to legal framework and trade facilitation. It highlights several initiatives to support new exporters/importers including a hand-holding scheme. It also discusses efforts to streamline processes such as issuing electronic Importer-Exporter Codes, reducing documentation requirements, implementing a single window system, and enabling 24/7 customs clearance. Memorandums of understanding have been signed with states and agencies to share electronic realization certificate data and facilitate refunds.
The document summarizes key aspects of India's foreign trade policy, including details on export and import items. Some highlights include:
1. The Ministry of Commerce and Industry announces India's Export-Import policy every five years to encourage foreign trade and balance of payments.
2. Major export items include live animals, cereals, gems and jewelry, iron and steel. Major import items include crude petroleum, precious stones, machinery, chemicals and electronic goods.
3. The policy focuses on initiatives for key sectors like agriculture, handlooms, handicrafts and gems/jewelry to increase India's share of global trade and employment opportunities.
This document provides an overview of India's industrial policies from 1948 to the present. It discusses the objectives and key features of various industrial policy resolutions enacted over time. The initial resolutions in 1948, 1956, and 1973 focused on expanding public sector involvement and prioritizing basic and strategic industries. Later policies in 1977, 1980, and 1991 aimed to liberalize the economy, encourage private sector growth, and attract foreign investment. The current scenario features fewer licensing requirements and greater openness to trade and globalization compared to earlier policies focused on import substitution and self-reliance.
Foreign direct investment (FDI) refers to investment made by a company or entity located in one country into business interests located in another country. There are several types of FDI including horizontal FDI where a company operates the same activities abroad as at home, and vertical FDI where different stages of production are located in different countries. FDI can be motivated by seeking resources, markets, efficiencies, or strategic assets. It provides benefits like job creation and technology transfer but may also displace domestic companies. India allows FDI through an automatic route without approval for some sectors, and through a government approval process for other sectors regulated for national interest.
The document provides an overview of India's foreign trade policy and its evolution over different phases since independence. It discusses how trade policy was initially used to restrict imports and promote exports to help domestic industries develop. India's trade policy has liberalized over several phases since the 1950s. Major reforms in 1991 substantially eliminated licensing, quotas, and other controls. The current foreign trade policy (2015-2020) aims to further liberalize and simplify trade while promoting exports. It introduces several schemes like Special Economic Zones to encourage trade and manufacturing.
Foreign direct investment (FDI) refers to direct investment into production in another country. FDI is generally preferred over other forms of external financing as it is non-debt creating and returns depend on project performance. India permits FDI through various routes like automatic approval, government approval, or Cabinet Committee approval depending on the sector and investment amount. The top sectors to receive FDI in India are services, construction, and telecommunications. Mauritius, Singapore, and the United States are the top countries investing in India, with Mauritius being the largest source of FDI.
foreign trade as an engine of economic growthMitikaAnjel
Foreign trade acts as an "engine" of economic growth in three key ways: 1) It enlarges a country's market for exports, leading to greater production and utilization of resources; 2) Expanding exports provides more employment opportunities and economies of scale, lowering costs; 3) Access to global markets encourages innovation as businesses compete with international counterparts, improving efficiency and productivity. For example, the opening of the Suez Canal increased India's exports of commercial crops like cotton and tea, fueling economic growth. Export processing zones also create jobs and incomes, stimulating demand and further domestic manufacturing. Overall, specialization, competition and technological adoption spurred by foreign trade can power economic expansion.
The document discusses production functions and their key characteristics. It defines production functions and provides examples. There are two main types of production functions - fixed proportions and variable proportions. The law of variable proportions describes the relationship between inputs and output when varying one input while holding others constant. In the short run, marginal returns initially increase, then diminish and eventually become negative. In the long run, all inputs are variable and production isoquants illustrate input combinations producing the same output level. Assumptions of production functions include perfect divisibility and substitution between factors.
A fantastic PPT on balance of payments. The PPT includes a complete of the meaning and various concepts of balance of payments. It also discusses about the type of transactions recorded in BOP and various types of accounts.
This document provides information about balance of payments (BOP) including:
- BOP is a systematic record of all economic transactions between a country and rest of world, including exports/imports of goods and services, as well as capital and financial flows.
- It has two main components - the current account which covers trade in goods and services, and the capital account which covers financial flows. It also includes unilateral transfers.
- A country aims to maintain a balanced BOP through various monetary and non-monetary policy measures that can influence exchange rates, imports/exports, and capital flows.
The balance of payments document discusses key aspects of a country's balance of payments (BOP) account including:
- The BOP uses double-entry bookkeeping and has debit and credit sides to record international transactions. It can be balanced, in surplus, or in deficit.
- The BOP provides information to governments about international trade and capital flows so they can implement appropriate policies.
- It is a systematic record of all economic transactions between residents of a country and foreign countries over a period, usually a year. These transactions include exports/imports of goods and services, as well as capital account flows.
The Balance of Payments is an accounting record of all monetary transactions between a country and the rest of the world over a specific period, usually a year. It summarizes exports and imports of goods, services, and financial capital. Sources of funds like exports are recorded as credits, while uses of funds like imports are recorded as debits. Overall the Balance of Payments must balance to zero. It includes the current account, which covers transactions like trade, and the capital account, which covers financial flows and investments.
Balance of payment is a systematic record of all economic transactions between a country and the rest of the world over a period of time, presented in a double-entry bookkeeping format. It includes credits for exports, services provided to foreign countries, and financial inflows; and debits for imports, services received from other countries, and financial outflows. A country has a balance of payments surplus if its credits exceed debits and a deficit if debits exceed credits. Countries use both monetary policies like adjusting exchange rates and non-monetary policies like promoting exports or restricting imports to address balance of payments deficits.
The balance of payments is a statistical statement that shows:
a) Transactions of goods, services, and income between a country and the rest of the world.
b) Changes in ownership of that country's monetary gold, SDRs, and claims and liabilities to other countries.
c) Transfers needed to balance entries that do not offset each other.
The document discusses balance of payments (BOP), which is an accounting statement that records all economic transactions between residents of a country and the rest of the world over a period of time. It includes current account transactions like trade in goods and services, transfers, and income as well as capital account transactions like borrowing/lending and investments. An adverse BOP means a country's imports exceed exports, which is negative for the economy. Causes of an adverse BOP include developmental activities, inflation, demand changes, and social factors. Corrective measures include deflation, monetary policy, trade policy, fiscal policy, currency devaluation, and exchange controls to boost exports and reduce imports.
India's balance of payments witnessed improvements in 2009-10 as the global economic recovery was visible. Exports and imports both increased during the third quarter, with the trade deficit lower than the previous year. The current account deficit was marginally higher for April-December 2009 compared to the same period in 2008, due to a fall in invisibles surplus despite a lower trade deficit. Capital flows remained strong, led by FDI, portfolio investments, and trade credits. Foreign exchange reserves increased by $27.1 billion for the year, reaching $279.1 billion in March 2010. The turnaround in exports and continued capital inflows inflows buoyed India's external sector.
This document discusses the balance of payments (BOP) of a country. It defines BOP as a systematic record of all economic transactions between a country and the rest of the world over a period of time, usually annually. It notes that the BOP has two components - the current account, which covers visible and invisible trade, and the capital account, which covers financial transactions like investments. A country experiences a BOP surplus if it receives more foreign currency than it spends, and a deficit if it spends more than it receives. It also discusses factors that can cause BOP disequilibria and measures governments can take to address BOP deficits.
this PPT contains explanation of balance of payments. current account, capital account,official reserve account, equilibrium of bop are explained here in it.autonomous and accommodating items, bop and bot difference.
The document discusses the concept of balance of payments, which refers to the systematic record of all economic transactions between a country and the rest of the world over a given period of time. It includes visible items like imports and exports of goods, invisible items like imports and exports of services, and capital transfers. The balance of payments aims to determine how much a country needs to receive from or pay to other countries, and what the overall balance position is. It can be in equilibrium, surplus, or deficit. The document outlines the key components, structure, and causes of disequilibrium in a country's balance of payments.
The Balance of Payments records a country's international transactions divided into the current account and capital account. The current account comprises trade in goods and services, income from foreign assets and payments on domestic assets owned by foreigners. If exports exceed imports it results in a trade surplus, but if imports exceed exports it results in a trade deficit. The capital account records transactions in real and financial assets between countries like FDI, portfolio investment and changes in official foreign exchange reserves. For the payments to balance, a current account deficit must be matched by an equal capital account surplus.
The balance of payments (BOP) of a country records all economic transactions between residents of that country and residents of other countries within a given period of time. The BOP has three components: the current account, which covers visible and invisible trade as well as income from investments; the capital account, which covers financial flows; and the reserve account, which covers transactions with the IMF. A country experiences a BOP deficit when total payments exceed total receipts, and a surplus when receipts exceed payments. Disequilibria can be corrected through various monetary and non-monetary policy measures that target exchange rates, exports, imports and capital flows.
The balance of payments (BOP) of a country records all economic transactions between residents of that country and residents of other countries within a given period of time. The BOP has three components: the current account, which covers visible and invisible trade as well as income from investments; the capital account, which covers financial flows; and the reserve account, which covers transactions with international institutions like the IMF. A country aims for a balanced BOP but may experience a surplus or deficit. Deficits can be addressed through various monetary and non-monetary policy measures that target exchange rates, exports, imports and capital flows.
The balance of payments records all economic transactions between a country and the rest of the world over a period of time. It includes visible items like exports and imports of goods, invisible items like services, and capital transfers. The balance of payments has a current account for trade in goods and services and a capital account for financial flows. A deficit or surplus in the balance of payments can be corrected through monetary measures like changing exchange rates or interest rates, or non-monetary measures like promoting exports and controlling imports.
This document provides an overview of a country's balance of payments. It defines the balance of payments as a systematic record of all economic transactions between residents of a country and foreign countries over a period of time, usually annually. It notes that the balance of payments has two sides, credits and debits, with receipts recorded on the credit side and payments on the debit side. It also distinguishes between different types of transactions that affect the current account and capital account and discusses using balance of payments data to analyze a country's economic strength and identify needed policy measures.
This document provides information about balance of payments and related concepts:
- It defines balance of payments as a record of all economic transactions between a country and the rest of the world over a period of time, including visible and invisible items as well as capital transfers.
- It explains the difference between balance of trade, which records only goods, and balance of payments, which includes goods, services, and capital transfers.
- It outlines the types of items included in balance of payments such as visible/invisible items and capital transfers.
The balance of payments is a systematic record of all economic transactions between residents of a country and residents of foreign countries over a period of time. It includes visible items like exports and imports of goods, and invisible items like services. The balance of payments provides a more comprehensive picture than just the balance of trade. It has two main components - the current account, which covers trade in goods and services, and the capital account, which covers financial flows like investments and official transactions between governments. Autonomous items in the balance of payments refer to transactions undertaken for economic motives, while accommodating items balance out the account. Disequilibria can arise due to various economic, political, and social factors.
The balance of payments is a systematic record of all economic transactions between residents of a country and residents of foreign countries over a period of time. It includes visible items like exports and imports of goods, and invisible items like services. The balance of payments provides a more comprehensive picture than just the balance of trade. It has two main components - the current account, which covers trade in goods and services, and the capital account, which covers financial flows like investments and official transactions between governments. Autonomous items in the balance of payments refer to transactions undertaken for economic motives, while accommodating items balance out the account. Disequilibria can arise due to various economic, political, and social factors.
How to Setup Warehouse & Location in Odoo 17 InventoryCeline George
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
Temple of Asclepius in Thrace. Excavation resultsKrassimira Luka
The temple and the sanctuary around were dedicated to Asklepios Zmidrenus. This name has been known since 1875 when an inscription dedicated to him was discovered in Rome. The inscription is dated in 227 AD and was left by soldiers originating from the city of Philippopolis (modern Plovdiv).
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
ISO/IEC 42001 Artificial Intelligence Management System - EN | PECB
General Data Protection Regulation (GDPR) - Training Courses - EN | PECB
Webinars: https://pecb.com/webinars
Article: https://pecb.com/article
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For more information about PECB:
Website: https://pecb.com/
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Slideshare: http://www.slideshare.net/PECBCERTIFICATION
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
LAND USE LAND COVER AND NDVI OF MIRZAPUR DISTRICT, UPRAHUL
This Dissertation explores the particular circumstances of Mirzapur, a region located in the
core of India. Mirzapur, with its varied terrains and abundant biodiversity, offers an optimal
environment for investigating the changes in vegetation cover dynamics. Our study utilizes
advanced technologies such as GIS (Geographic Information Systems) and Remote sensing to
analyze the transformations that have taken place over the course of a decade.
The complex relationship between human activities and the environment has been the focus
of extensive research and worry. As the global community grapples with swift urbanization,
population expansion, and economic progress, the effects on natural ecosystems are becoming
more evident. A crucial element of this impact is the alteration of vegetation cover, which plays a
significant role in maintaining the ecological equilibrium of our planet.Land serves as the foundation for all human activities and provides the necessary materials for
these activities. As the most crucial natural resource, its utilization by humans results in different
'Land uses,' which are determined by both human activities and the physical characteristics of the
land.
The utilization of land is impacted by human needs and environmental factors. In countries
like India, rapid population growth and the emphasis on extensive resource exploitation can lead
to significant land degradation, adversely affecting the region's land cover.
Therefore, human intervention has significantly influenced land use patterns over many
centuries, evolving its structure over time and space. In the present era, these changes have
accelerated due to factors such as agriculture and urbanization. Information regarding land use and
cover is essential for various planning and management tasks related to the Earth's surface,
providing crucial environmental data for scientific, resource management, policy purposes, and
diverse human activities.
Accurate understanding of land use and cover is imperative for the development planning
of any area. Consequently, a wide range of professionals, including earth system scientists, land
and water managers, and urban planners, are interested in obtaining data on land use and cover
changes, conversion trends, and other related patterns. The spatial dimensions of land use and
cover support policymakers and scientists in making well-informed decisions, as alterations in
these patterns indicate shifts in economic and social conditions. Monitoring such changes with the
help of Advanced technologies like Remote Sensing and Geographic Information Systems is
crucial for coordinated efforts across different administrative levels. Advanced technologies like
Remote Sensing and Geographic Information Systems
9
Changes in vegetation cover refer to variations in the distribution, composition, and overall
structure of plant communities across different temporal and spatial scales. These changes can
occur natural.
Communicating effectively and consistently with students can help them feel at ease during their learning experience and provide the instructor with a communication trail to track the course's progress. This workshop will take you through constructing an engaging course container to facilitate effective communication.
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
Philippine Edukasyong Pantahanan at Pangkabuhayan (EPP) CurriculumMJDuyan
(𝐓𝐋𝐄 𝟏𝟎𝟎) (𝐋𝐞𝐬𝐬𝐨𝐧 𝟏)-𝐏𝐫𝐞𝐥𝐢𝐦𝐬
𝐃𝐢𝐬𝐜𝐮𝐬𝐬 𝐭𝐡𝐞 𝐄𝐏𝐏 𝐂𝐮𝐫𝐫𝐢𝐜𝐮𝐥𝐮𝐦 𝐢𝐧 𝐭𝐡𝐞 𝐏𝐡𝐢𝐥𝐢𝐩𝐩𝐢𝐧𝐞𝐬:
- Understand the goals and objectives of the Edukasyong Pantahanan at Pangkabuhayan (EPP) curriculum, recognizing its importance in fostering practical life skills and values among students. Students will also be able to identify the key components and subjects covered, such as agriculture, home economics, industrial arts, and information and communication technology.
𝐄𝐱𝐩𝐥𝐚𝐢𝐧 𝐭𝐡𝐞 𝐍𝐚𝐭𝐮𝐫𝐞 𝐚𝐧𝐝 𝐒𝐜𝐨𝐩𝐞 𝐨𝐟 𝐚𝐧 𝐄𝐧𝐭𝐫𝐞𝐩𝐫𝐞𝐧𝐞𝐮𝐫:
-Define entrepreneurship, distinguishing it from general business activities by emphasizing its focus on innovation, risk-taking, and value creation. Students will describe the characteristics and traits of successful entrepreneurs, including their roles and responsibilities, and discuss the broader economic and social impacts of entrepreneurial activities on both local and global scales.
2. INTRODUCTION
• Balance of Payments (BOP) accounts are 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,
financial capital, and financial transfers.
• According to Kindle Berger, “ The balance of payments of a
country is a systematic record of all economic transactions
between the residents of the reporting country and residents
of foreign countries during a given period of time”.
3. • A country has to deal with other countries in respect
of 4 items:-
• Visible items which includes all types of physical
goods exported and imported.
• Invisible items which include all those services whose
export and import are not visible. E.g. transport
services, medical services etc.
• Capital transfers which are concerned with capital
receipts and capital payment.
• Unilateral transfers is a one-way transfer of money,
goods, or services from one country to another.
4. FEATURES
• It is a systematic record of all economic transactions
between one country and the rest of the world.
• It includes all transactions, visible as well as invisible.
• It relates to a period of time. Generally, it is an annual
statement.
• It adopts a double-entry book-keeping system. It has two
sides: credit side and debit side. Receipts are recorded on
the credit side and payments on the debit side.
7. THE GENERAL RULE IN BALANCE OF
PAYMENT ACCOUNTING
• If a transaction earns foreign currency for the nation, it is a
credit and is recorded as a plus item.
• If a transaction involves spending of foreign currency it is a
debit and is recorded as a negative item.
• Buying goods and services creates debit entries and selling
things produces credit entries.
9. CURRENT ACCOUNT
• BOP on current account is a statement of actual receipts and
payments in short period.
• It includes the value of export and imports of both visible and
invisible goods. There can be either surplus or deficit in current
account.
• The current account includes: export & import of services, interests,
profits, dividends and unilateral receipts/payments from/to abroad.
• BOP on current account refers to the inclusion of three balances of
namely – Merchandise balance, Services balance and Unilateral
Transfer balance.
11. MAIN COMPONENTS OF CURRENT ACCOUNT
Export and Imports of Goods (Merchandise Transactions or Visible
Trade) :
• A major part of transactions in foreign trade is in the form of export
and imports of goods (visible items). Payment for import of goods is
written on the negative side (debit items) and receipts from exports is
shown on the positive side (credit items). Balance of these visible
exports and imports is known as balance of trade ( or trade balance)
Export and Import of Services ( Invisible Trade) :
• It includes a large variety of non-factor services (known as invisible
items) sold and purchased by the residents of a country, to and from
the rest of the world. Payments are either received or made to the
other countries for use of these services.
12. • Services are generally of three kinds :
(a.) Shipping,
(b.) Banking, and
(c.) Insurance.
Payments for these services are recorded on the negative side and receipts on the positive
side.
Unilateral Transfer to and from abroad (One sided Transactions) :
Unilateral transfers include gifts, donations, personal remittances and other ‘one-way’
transactions. These refers to those receipts and payments, which take place without any
service in return. Receipt of unilateral transfers from rest of the world is shown on the credit
side and unilateral transfers to rest of the world on the debit side.
Income Receipts & Payments to and from abroad :
It includes investment income in form of interest, rent and profit.
13. CREDIT ITEMS DEBIT ITEMS NET CREDIT (Credit – Debit)
1. Visible Trade Exports of
goods:
Imports of goods Net Exports of goods (Balance of
Trade)
2. Invisible Trade Exports
of services:
Imports of services Net Exports of services
3. Unilateral Transfers
Transfer Receipts:
Transfer Payments Net Transfer Receipts
4. Income Receipts &
Payments Income Receipts:
Income Payments Net Income Receipts
Current Receipts
(1+2+3+4)
Current Payments Current Account Balance
14. BOT V/S CURRENT ACCOUNT
Basis Balance of Trade
(BOT)
Current Account
Components: Balance of trade includes only
visible items.
Current Account records both
visible and invisible items.
Scope: It is a narrow concept as it is
only a part of current account
It is a wider concept and it includes
BOT.
15. CAPITAL ACCOUNT
• The capital account of a country consists of its transactions in
financial assets in the form of short-term and long-term lending’s
and borrowings, and private and official investments. In other
words, the capital account shows international flow of loans and
investments, and represents a change in the country’s foreign
assets and liabilities.
• The capital account records all international transactions that
involve a resident of the country concerned changing either his
assets with or his liabilities to a resident of another country.
Transactions in the capital account reflect a change in a stock-
either assets or liabilities.
16. • There can be surplus or deficit in capital account.
• The credit side records:
The official and private borrowing from abroad net of
repayments.
Direct and portfolio investment.
Short term investments into the country.
• The debit side records:
Disinvestment of capital.
Country’s investment abroad.
Loans given to the foreign government or a foreign party.
18. BALANCE OF CAPITAL ACCOUNT
The transactions, which lead to inflow of foreign exchange ( like receipt
of loans from abroad, sale of assets or shares in foreign countries, etc.),
are recorded on the credit or positive side of capital account. Similarly,
transactions, which lead to outflow of foreign exchange ( like
repayment of loans, purchase of assets or shares in foreign countries,
etc.), are recorded on the debit or negative side. The net value of credit
and debit balances is the balance on capital account.
Surplus in capital account arises when credit items are more than
debit items. It indicates net inflow of capital.
Deficit in capital account arises when debit items are more than
credit items. It indicates net outflow of capital.
19. Credit Items Debit Items Net Credit (Credit – Debit)
1. Borrowings and lending’s to
and from abroad Borrowings
from abroad:
Lending to abroad Net Borrowings from abroad
2. Investments from abroad
Investments from abroad:
Investments to abroad Net Investments from abroad
3. Change in Foreign Exchange
Reserves.
Decreases in foreign exchange
reserves:
Increases in foreign exchange
reserves
Net change in foreign exchange
reserves
Capital Receipts
(1+2+3):
Capital Payments Capital Account Balance
21. RESERVE ACCOUNT/ OTHER ACCOUNT
This account is to adjust deficit/surplus in BOP.
Represents purchase and sale by RBI.
Govt. owned assets.
SDRs.
Foreign Exchange Reserve.
Gold.
23. DISEQUILIBRIUM OF BOP
• Though the credit and debit are written balance in the balance of payment
account, it may not remain balanced always. Very often, debit exceeds
credit or the credit exceeds debit causing an imbalance in the balance of
payment account. Such an imbalance is called the disequilibrium.
• DEFICIT : Disequilibrium of Deficit arises when our receipts from the
foreigners fall below our payment to foreigners. It arises when the effective
demand for foreign exchange of the country exceeds its supply at a given
rate of exchange. This is called an ‘unfavourable balance’.
• SURPLUS : Disequilibrium of Surplus arises when the receipts of the
country exceed its payments. Such a situation arises when the effective
demand for foreign exchange is less than its supply. Such a surplus
disequilibrium is termed as ‘favourable balance’.
24. FACTORS AFFECTING BALANCE OF
PAYMENTS
• The balance of payments can be affected two accounts:
• Current Account
• Capital Account
1. Factors Affecting the Current Account:
• A country’s current account balance can significantly change its national economy.
Therefore, it is important to identify the factors that influence current account.
The most important factors affecting current account are:
• Inflation
• National Income
• Government Restructures
• Exchange Rates.
25. • Inflation: If a country’s inflation rate increases relative to the other countries with which
it trades, its current account would be expected to decline. Due to higher prices at home,
consumers and corporations within the country are most likely to purchase more goods
and services overseas (due to high local inflation), while the country’s exports to other
countries will fall.
• National Income: If the national income of a country rises by a higher percentage than
those of other nations, its current account is expected to decline, other things being
same. As the real income level (adjusted for inflation) rises, so does consumption of
goods. A percentage of that increase in consumption of goods will most likely reflect an
increase in demand for the foreign nation goods.
• Government Restrictions: If a country’s government imposes a particular type of
tax (often referred to as a tariff tax) on imported goods from foreign countries, the prices
of foreign goods to consumers effectively increases. An increase in prices of imported
goods relative to goods produced at domestic country will discourage imports and is
expected to increase its current account balance. In addition to tariffs, a government may
reduce its imports by enforcing a quota, or a maximum limit on imports.
• Exchange Rates: The value of a country’s currency regarding other currencies is called
the exchange rate. Changes in a currency’s exchange rate brought about by market forces
or actions by national government or government of other countries will influence a
country’s current account balance. An appreciation in a country’s exchange rate vis-a-vis
another country’s currency, other things being equal, is likely to lead to a decline in the
country’s exports and increase in imports.
26. FACTORS AFFECTING CAPITAL ACCOUNT
As with the current flows, government policies will also change the
capital account. A country’s government could, for example, impose a
special tax on income account by local investors who invested in foreign
markets. A tax would discourage people from investing abroad and
could, therefore, increase the country’s capital account. Capital flows
are also influenced by capital controls of various types. Interest rates
also affect the capital flows. A hike in interest rates relative to other
countries may affect capital inflows from overseas countries.
Conversely, a reduction in domestic interest rates may induce people to
invest overseas.
27. METHODS OF CORRECTING BOP
DISEQUILIBRIUM
• Use of past reserves: A country may make use of past reserves to
finance the BOP deficit provided such reserves are available. Such
reserves consists of gold, foreign currencies and fund related assets
i.e. reserve position with the IMF and holding of special drawing
rights.
• Borrowing from IMF: Countries with disequilibrium in BOP can make
use of IMF facilities. These are :
Stand by loans.
Extended Fund Facilities (EFF).
Structure Adjustment Facilities (SAF).
Enlarged Structural Adjustment Facilities (ESAF).
28. Compensatory and Contingency Financing Facilities (CCFF).
Systematic Transformation Facilities (STF).
• Monetary and Fiscal Policy Measures: The Monetary Policy is
concerned with money supply and credit in the economy. The Central
Bank may expand or contract the money supply in the economy
through appropriate measures which will affect the prices.
Fiscal Policy is government’s policy on income and expenditure. It gets
income through taxation and non-tax sources. Depending on the
situation the governments expenditure may be increased or decreased.
• Exchange Rate Adjustments: By reducing the value of the domestic
currency, government can correct the disequilibrium in BOP. Exchange
rate depreciation reduces the value of the home currency in relation
to foreign currency. As a result exports will be encouraged and
imports will be discouraged and equilibrium is restored.
29. • Export Promotion: To control export promotions the country may
adopt measures to stimulate exports like:
Export duties may be reduced to boost exports.
Subsidies can be given to exporters to increase exports.
Goods meant for exports can be exempted from taxes.
• Import Substitution: It is a strategy under trade policy that abolishes
the import of foreign products and encourages for the production in
domestic market. The purpose of this policy is to change the
economic structure of the country by replacing foreign goods with
domestic goods.
The government may fix and permit quantity through quotas.
Tariffs are duties or taxes imposed on imports.