What is Balance of Payment?

Transcript

Different Transactions in Foreign Trade Transaction in Goods India Export Steel China India Import Mobile China Transaction in Services India Export IT Service USA India Legal Service UK Transaction in Assets India Deposit Money Swiss Banks Indian Company Investment Foreign Investor What is Balance of Payment? We know that There are Different Transactions in Foreign Trade Transaction in Goods Transaction in Services Transaction in Assets Record of these is kept in Balance of Payment What is Balance of Payment? It is an economic record of transactions in goods, services and asset between Residents of Country And Rest of World in an accounting year Important Points about Balance of Payment It covers only Economic Transactions Different Types of Transactions Economic Transactions Non -Economic Transactions Transactions providing Economic Value Transactions not having Economic Value Example Import Export Investment Loan Example USA President visited India Agreement signed between France &India Only these shown in BOP These not shown in BOP Bill of Payment follows Double Entry System It shows both Receipts and Payments Which are Credited and Debited respectively Receipts (Inflow) it covers Money Received from Different foreign Trade transactions Example Export of Goods Export of Service Investment Rec Loan Taken They are Credited In BOP Payments (Outflow) it covers Money Paid for different foreign Trade transactions Example Import of Goods Import of Service Investment Made Loan Given They are Debited in BOP Debt and Credit of Different Transactions in Balance of Payment -Example Transaction in Goods Import of Goods Export of Goods Inflows/ Outflows Outflows Inflows Debited/ Credited Debited Credited Transaction in Services Import of Service Export of Services Inflows/ Outflows Outflows Inflows Debited/ Credited Debited Credited Transaction in Assets Investment Made Outside India Loan taken from Outside India Inflows/ Outflows Outflows Inflows Debited/ Credited Debited Credited Types of Accounts in Balance of Payment Current Account Capital Account It records trade of goods, services and transfer payments It records International transaction of assets or liabilities Example Export Import of Goods/Services Gift/Donation Received paid Outside Country Salary Received/Paid outside country Example Loan taken from outside Country Loan given Outside country Investment Made in Foreign Assets Note-This is called BOP Classification