Balance of Payments

India’s Balance of Payments Concepts, Compilation and Recent Scenario 1950-51 to 2003-04 EPW Research Foundation* February 2005 * An original note on the subject was published in the Economic and Political Weekly (EPW) of November 13-20, 1993. The same has been thoroughly revised and updated by Ms. Shilpa Jain for publication on the website www. epwrf. res

Concepts, Compilation and Recent Scenario: 1950-51 to 2003-04 I Key Concepts balance of payments statement is essentially a double entry system of record for a given period of an economy’s two-way international transactions in the form of goods and services, receipts and payments of incomes, transfers without quid pro quo and financial claims and liabilities. With a view to standardising the concepts and definitions, classificatory schemes and conventions applied in the compilation of balance of payment statistics by various countries, the International Monetary Fund (IMF) has prescribed a Balance of Payment Manual. India, as in the case of other member countries of the IMF, has adopted the same as a conceptual and methodological basis for compiling her balance of payment account. However, there exist some departures from the IMF framework due to the constraints of data availability and to take account of the country’s institutional structure. Principally, the balance of payment (BOP) account records transactions between a resident economic entity and the rest of the world. Though the resident status of an individual is conceived in terms of the permanence of interest within a given territory, the rule of thumb adopted for recognition f such permanence is a stay of one year or more. Tourist and commercial travellers, employees of foreign governments and international bodies on a mission of less than one year and seasonal workers from foreign countries, are all considered as residents of the economy in which they normally live. Major exceptions to this are the official diplomatic and consular representatives, members of armed forces and other government personnel of a foreign country stationed in a given country who are treated (together with their dependents) as non-residents for the country of their posting or as residents of the country they represent.

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Current and Capital Accounts In BOP accounting, transactions relating to goods, services and income, and current transfers constitute the current account, while those relating to claims and liabilities of a financial nature and capital transfers and acquisition or disposals of non-produced, non-financial assets which go to finance the deficit on current account, or to absorb its surplus, form the capital account. The sum of these current and capital account transactions together constitutes the basic balance on BOP and theoretically it should be finally rounded up.

The double-entry accounting should be closed with the help of:

by the EPW Research Foundation (2003) ; it is: “ International Reserve, Foreign Currency Liquidity and External Debt: Data template”, Economic and Political Weekly, September 30, 2003. Symbols and Abbreviations 1

The following symbols have been used throughout the article. .. = data not available -,

  • 0 = nil or negligible . = Denotes data not available separately and has been clubbed elsewhere.
  • f. o. b. = free on board c. i. f- cost, insurance and freight.
  • NR(E)RA = Non-Resident (External) Rupee Account
  • FCNR (B) = Foreign Currency Non-Resident (Banks)

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Balance of Payments. (2018, Feb 26). Retrieved from https://graduateway.com/balance-of-payments-2/