BOP Assignment

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ASSIGNMENT

BALANCE OF PAYMENT IN INDIA

PREPARED BY:- SAJID KARBHARI

PGCCM (KOTAK BATCH III)

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Balance Of Payments Position in India

Definition:

Balance of payments 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.

In simple words, it is the method countries use to monitor all international monetary transactions

at a specific period of time. Usually, the BOP is calculated every quarter and every calendar

year. All trades conducted by both the private and public sectors are accounted for in the BOP in

order to determine how much money is going in and out of a country. If a country has received

money, this is known as a credit, and if a country has paid or given money, the transaction is

counted as a debit. Theoretically, the BOP should be zero, meaning that assets (credits) and

liabilities (debits) should balance, but in practice this is rarely the case. Thus, the BOP can tell

the observer if a country has a deficit or a surplus and from which part of the economy the

discrepancies are stemming.

In other words:

The balance of payments of a country is a systematic record of all economic transactions

between the residents of a country and the rest of the world. It presents a classified record of all

receipts on account of goods exported, services rendered and capital received by residents and

payments made by theme on account of goods imported and services received from the capital

transferred to non-residents or foreigners.

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Purpose:

The BOP is an important indicator of pressure on a country’s foreign exchange rate, and

thus on the potential for a firm trading with or investing in that country to experience

foreign exchange gains or losses. Changes in the BOP may predict the imposition or

removal of foreign exchange controls.

Changes in a country’s BOP may signal the imposition or removal of controls over

payment of dividends and interest, license fees, royalty fees, or other cash disbursements

to foreign firms or investors.

The BOP helps to forecast a country’s market potential, especially in the short run. A

country experiencing a serious trade deficit is not likely to expand imports as it would if

running a surplus. It may, however, welcome investments that increase its exports.

The Various Components Of A BOP Statement

A. Current Account

B. Capital Account

C. Errors & Omissions

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Current Account

The current account shows the net amount a country is earning if it is in surplus, or spending if it

is in deficit. It is the sum of the balance of trade (net earnings on exports minus payments for

imports), factor income (earnings on foreign investments minus payments made to foreign

investors) and cash transfers. It is called the current account as it covers transactions in the "here

and now" – those that don't give rise to future claims.

It can be calculated by a formula:

Where,

CA: current account

X and M: export and import of goods and services respectively

NY: net income from abroad

NCT: net current transfers.

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BALANCE OF CURRENT ACCOUNT

BOP on current account refers to the inclusion of three balances of namely – Merchandise

balance, Services balance and Unilateral Transfer balance. In other words it reflects the net flow

of goods, services and unilateral transfers (gifts). The net value of the balances of visible trade

and of invisible trade and of unilateral transfers defines the balance on current account.

BOP on current account is also referred to as Net Foreign Investment because the sum represents

the contribution of Foreign Trade to GNP.

Thus the BOP on current account includes imports and exports of merchandise (trade balances),

military transactions and service transactions (invisibles). The service account includes

investment income (interests and dividends), tourism, financial charges (banking and insurances)

and transportation expenses (shipping and air travel). Unilateral transfers include pensions,

remittances and other transfers for which no specific services are rendered.

It is also worth remembering that BOP on current account covers all the receipts on account of

earnings (or opposed to borrowings) and all the payments arising out of spending (as opposed to

lending). There is no reverse flow entailed in the BOP on current account transactions.

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STRUCTURE OF CURRENT ACCOUNT

Transactions Credit Debit Net Balance

1. Merchandise Export Import -

2. Foreign Travel Earning Payment -

3. Transportation Earning Payment -

4. Insurance (Premium) Receipt Payment -

5. Investment Income Dividend Receipt Dividend Payment -

6.Government (purchase of

goods & services)

Receipt Payment -

Current A/C Balance - - Surplus (+)

Deficit (-)

THE CAPITAL ACCOUNT

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.

It is often useful to make distinctions between various forms of capital account transactions. The

basic distinctions are between private and official transactions, between portfolio and direct

investment and by the term of the investment (i.e. short or long term). The distinction between

private and official transaction is fairly transparent, and need not concern us too much, except for

noting that the bulk of foreign investment is private.

Direct investment is the act of purchasing an asset and the same time acquiring control of it

(other than the ability to re-sell it). The acquisition of a firm resident in one country by a firm

resident in another is an example of such a transaction, as is the transfer of funds from the

‘parent company in order that the ‘subsidiary’ company may itself acquire assets in its own

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country. Such business transactions form the major part of private direct investment in other

countries, multinational corporations being especially important. There are of course some

examples of such transactions by individuals, the most obvious being the purchase of the ‘second

home’ in another country.

Portfolio investment by contrast is the acquisition of an asset that does not give the purchaser

control. An obvious example is the purchase of shares in a foreign company or of bonds issued

by a foreign government. Loans made to foreign firms or governments come into the same broad

category. Such portfolio investment is often distinguished by the period of the loan (short,

medium or long are conventional distinctions, although in many cases only the short and long

categories are used). The distinction between short term and long term investment is often

confusing, but usually relates to the specification of the asset rather than to the length of time of

which it is held. For example, a firm or individual that holds a bank account with another country

and increases its balance in that account will be engaging in short term investment, even if its

intention is to keep that money in that account for many years. On the other hand, an individual

buying a long term government bond in another country will be making a long term investment,

even if that bond has only one month to go before the maturity. Portfolio investments may also

be identified as either private or official, according to the sector from which they originate.

The purchase of an asset in another country, whether it is direct or portfolio investment, would

appear as a negative item in the capital account for the purchasing firm’s country, and as a

positive item in the capital account for the other country. That capital outflows appear as a

negative item in a country’s balance of payments, and capital inflows as positive items, often

causes confusions. One way of avoiding this is to consider that direction in which the payment

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would go (if made directly). The purchase of a foreign asset would then involve the transfer of

money to the foreign country, as would the purchase of an (imported) good, and so must appear

as a negative item in the balance of payments of the purchaser’s country (and as a positive item

in the accounts of the seller’s country).

The net value of the balances of direct and portfolio investment defines the balance on capital

account.

Short term capital movement includes:

Purchase of short term securities

Speculative purchase of foreign currency

Cash balances held by foreigners

Net balance of current account

Long term capital movement includes:

Investments in shares, bonds, physical assets etc.

Amortization of capital

CAPITAL ACCOUNT CONVERTIBILITY (CAC)

While there is no formal definition of Capital Account Convertibility, the committee under the

chairmanship of S.S. Tarapore has recommended a pragmatic working definition of CAC.

Accordingly CAC refers to the freedom to convert local financial assets into foreign financial

assets and vice – a – versa at market determined rates of exchange. It is associated with changes

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of ownership in foreign / domestic financial assets and liabilities and embodies the creation and

liquidation of claims on, or by, the rest of the world. CAC is coexistent with restrictions other

than on external payments. It also does not preclude the imposition of monetary / fiscal measures

relating to foreign exchange transactions, which are of prudential nature.

Following are the prerequisites for CAC:

1. Maintenance of domestic economic stability.

2. Adequate foreign exchange reserves.

3. Restrictions on inessential imports as long as the foreign exchange position is not very

comfortable.

4. Comfortable current account position.

5. An appropriate industrial policy and a conducive investment climate.

6. An outward oriented development strategy and sufficient incentives for export growth.

DIFFERENCE BETWEEN CURRENT ACCOUNT AND CAPITAL ACCOUNT

CURRENT ACCOUNT CAPITAL ACCOUNT

• Indicates flow aspect of

country’s national transactions

• Relates to goods , services and

unrequited transfers

• Indicates changes in stock magnitudes

• Relates to all transactions constituting

debts and transfer of ownership

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STRUCTURE OF BALANCE OF PAYMENTS ACCOUNT

CREDITS DEBITS

Current A/c:

• Exports of goods(Visible items)

• Exports of services (Invisibles)

• Unrequited receipts(gifts , remittances,

indemnities, etc. from foreigners)

Capital A/c:

• Capital receipts (Borrowings from

abroad, capital repayments by, or sale

of assets to foreigners, increase in stock

of gold and reserves of foreign currency

etc.)

Current A/c:

• Imports of goods(Visible items)

• Imports of services(Invisibles)

• Unrequited payments( gifts,

remittance, indemnities etc. to

foreigners)

Capital A/c:

• Capital payments (lending to, capital

repayments to, or purchase of assets

from foreigners, reduction in stock of

gold and reserves of foreign currency

etc.)

ERRORS AND OMISSIONS

Errors and omissions is a “statistical residue.” It is used to balance the statement because in

practice it is not possible to have complete and accurate data for reported items and because

these cannot, therefore, ordinarily have equal entries for debits and credits. The entry for net

errors and omissions often reflects unreported flows of private capital, although the conclusions

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that can be drawn from them vary a great deal from country to country, and even in the same

country from time to time, depending on the reliability of the reported information. Developing

countries, in particular, usually experience great difficulty in providing reliable information.

Errors and omissions (or the balancing item) reflect the difficulties involved in recording

accurately, if at all, a wide variety of transactions that occur within a given period of (usually 12

months). In some cases there is such large number of transactions that a sample is taken rather

than recording each transaction, with the inevitable errors that occur when samples are used. In

others problems may arise when one or other of the parts of a transaction takes more than one

year: for example with a large export contract covering several years some payment may be

received by the exporter before any deliveries are made, but the last payment will not made until

the contract has been completed. Dishonesty may also play a part, as when goods are smuggled,

in which case the merchandise side of the transaction is unreported although payment will be

made somehow and will be reflected somewhere in the accounts. Similarly the desire to avoid

taxes may lead to under-reporting of some items in order to reduce tax liabilities.

Finally, there are changes in the reserves of the country whose balance of payments we are

considering, and changes in that part of the reserves of other countries that is held in the country

concerned. Reserves are held in three forms: in foreign currency, usually but always the US

dollar, as gold, and as Special Deposit Receipts (SDR’s) borrowed from the IMF. Note that

reserves do not have to be held within the country. Indeed most countries hold a proportion of

their reserves in accounts with foreign central banks.

The changes in the country’s reserves must of course reflect the net value of all the other

recorded items in the balance of payments. These changes will of course be recorded accurately,

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and it is the discrepancy between the changes in reserves and the net value of the other record

items that allows us to identify the errors and omissions.

Balance Of Payment in India

India’s balance of payment position was quite unfavorable during the time of country’s entry into

liberalized trade regime. Two decades of economic reforms and free trade opened several

opportunities that, of course, reflected in the balance of payments performance of the country.

ADVANTAGES OF BOP

Comparative advantage influences the balance of payments through its effect on the current

account. The balance of payments describes the overall balance of international trade, finance

and capital flows for a country. The current account focuses specifically on trade, meaning

exports and imports. For payments to balance, the current account should equal the financial

account and the capital account. These accounts specifically track monetary investments in

companies and purchases of non-productive and non-financial assets, respectively.

The current account itself balances when the value of exports equals the value of imports. When

exports exceed imports, there is a trade surplus, and when imports exceed exports there is a trade

deficit. Comparative advantage is a key factor in determining the mix of exports and imports for

a country, so it is useful in analyzing the current account and the overall balance of payments.

Comparative advantage is the idea that a country should specialize in activities that present the

lowest opportunity cost. It doesn't matter if a nation has an absolute advantage in every product

category, which would mean that it could produce all of them at a lower price than another

nation. Specializing in the products with the highest returns and trading for the other products

produces greater benefits on the whole.

Comparative advantage can be gained from economies of scale, a skilled labor force or natural

resources. It can be seen often in global trade: the American economy produces a lot of

innovation and services, for example, while the Bangladeshi economy produces a lot of

innovation. These specialties arise from differences in comparative advantage, which in turn

affect the components of the current account.

A country importing more goods and services than it exports, like the United States, runs a trade

deficit, which in turn must be financed through asset sales or borrowing. This affects the overall

balance of payments picture.

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CHARACTERISTICS OF BOP

There Is Money at the BOP

The dominant assumption is that the poor have no purchasing power and therefore do not

represent a viable market.

Access to BOP Markets

The dominant assumption is that distribution access to the BOP markets is very difficult and

therefore represents a major impediment for the participation of large firms and MNCs.

The BOP Markets Are Brand-Conscious

The dominant assumption is that the poor are not brand-conscious. On the contrary, the poor are

very brand-conscious. They are extremely value-conscious by necessity.

The BOP Market is Connected

Contrary to the popular view, BOP consumers are getting connected and networked. They are

rapidly exploiting the benefits of information networks

BOP Consumers Accept Advanced Technology Readily

Contrary to popular belief, the BOP consumers accept advanced technology readily.

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TRADE AND BALANCE OF PAYMENT

INDIA’S FOREIGN TRADE - US DOLLAR

EXPORT IMPORT TRADE BALANCE

Oil Non-Oil Total Oil Non-Oil Total Oil Non-Oil Total

1 2 3 4 5 6 7 8 9 10

1976-77 20.8 5707.6 5728.4 1574.3 4077.4 5651.7 -1553.5 1630.2 76.7

1977-78 18.3 6280.3 6298.6 1806.4 5205.4 7011.8 -1788.1 1074.9 -713.2

1978-79 17.2 6943.1 6960.3 2038.2 6240.5 8278.7 -2021.0 702.6 -1318.4

1979-80 23.3 7903.1 7926.4 4034.7 7255.9 11290.6 -4011.4 647.2 -3364.2

1980-81 31.5 8453.2 8484.7 6654.9 9211.6 15866.5 -6623.4 -758.4 -7381.8

1981-82 246.3 8457.6 8703.9 5786.2 9386.7 15172.9 -5539.9 -929.1 -6469.0

1982-83 1278.0 7829.6 9107.6 5816.2 8970.4 14786.6 -4538.2 -1140.8 -5679.0

1983-84 1535.8 7913.6 9449.4 4673.1 10637.8 15310.9 -3137.3 -2724.2 -5861.5

1984-85 1529.4 8348.7 9878.1 4549.8 9862.5 14412.3 -3020.4 -1513.8 -4534.2

1985-86 527.0 8377.5 8904.5 4078.0 11988.9 16066.9 -3551.0 -3611.4 -7162.4

1986-87 321.8 9422.9 9744.7 2199.5 13527.2 15726.7 -1877.7 -4104.3 -5982.0

1987-88 500.4 11588.1 12088.5 3118.1 14037.6 17155.7 -2617.7 -2449.5 -5067.2

1988-89 348.7 13621.7 13970.4 3009.0 16488.2 19497.2 -2660.3 -2866.5 -5526.8

1989-90 418.4 16194.1 16612.5 3767.5 17451.7 21219.2 -3349.1 -1257.6 -4606.7

1990-91 522.7 17622.5 18145.2 6028.1 18044.4 24072.5 -5505.4 -421.9 -5927.3

1991-92 414.7 17450.7 17865.4 5324.8 14085.7 19410.5 -4910.1 3365.0 -1545.1

1992-93 476.2 18061.0 18537.2 6100.0 15781.6 21881.6 -5623.8 2279.4 -3344.4

1993-94 397.8 21840.5 22238.3 5753.5 17552.7 23306.2 -5355.7 4287.8 -1067.9

1994-95 416.9 25913.6 26330.5 5927.8 22726.5 28654.4 -5510.9 3187.1 -2323.8

1995-96 453.7 31341.2 31794.9 7525.8 29149.5 36675.3 -7072.0 2191.7 -4880.4

1996-97 481.8 32987.9 33469.7 10036.2 29096.2 39132.4 -9554.4 3891.7 -5662.7

1997-98 352.8 34653.7 35006.4 8164.0 33320.5 41484.5 -7811.2 1333.1 -6478.1

1998-99 89.4 33129.3 33218.7 6398.6 35990.1 42388.7 -6309.2 -2860.8 -9170.0

1999-00 38.9 36783.5 36822.4 12611.4 37059.3 49670.7 -12572.5 -275.8 -12848.3

2000-01 1869.7 42690.6 44560.3 15650.1 34886.4 50536.5 -13780.4 7804.2 -5976.2

2001-02 2119.1 41707.6 43826.7 14000.3 37413.0 51413.3 -11881.2 4294.6 -7586.6

2002-03 2576.5 50142.9 52719.4 17639.5 43772.6 61412.1 -15063.0 6370.3 -8692.7

2003-04 3568.4 60274.1 63842.6 20569.5 57579.6 78149.1 -17001.1 2694.5 -14306.5

2004-05 6989.3 76546.6 83535.9 29844.1 81673.3 111517.4 -22854.8 -5126.7 -27981.5

2005-06 11639.

6

91450.9 103090.5 43963.1 105202.6 149165.7 -32323.5 -13751.7 -46075.2

2006-07 18634.

6

107779.5 126414.1 56945.3 128790.0 185735.2 -38310.7 -21010.5 -59321.2

2007-08 28363.

1

134541.1 162904.2 79644.5 171794.7 251439.2 -51281.4 -37253.6 -88535.0

2008-09 27547.

0

157748.0 185295.0 93671.7 210024.6 303696.3 -66124.8 -52276.6 -

118401.3 2009-10 28192.

0

150559.5 178751.4 87135.9 201237.0 288372.9 -58943.9 -50677.5 -

109621.4 2010-11 41480.

0

209656.2 251136.2 105964.4 263804.7 369769.1 -64484.4 -54148.5 -

118632.9 2011-12 56038.

5

249925.3 305963.9 154967.6 334352.0 489319.5 -98929.0 -84426.6 -

183355.7

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2012-13 60865.

1

239535.5 300400.7 164040.6 326696.1 490736.7 -103175.5 -87160.6 -

190336.0 2013-14 63179.

4

251236.3 314415.7 164770.3 285443.3 450213.7 -101591.0 -34207.0 -

135798.0 2014-15 57042.

3

253491.6 310533.9 138324.7 309223.6 447548.3 -81282.5 -55732.0 -

137014.5

EXPORT IMPORT TRADE BALANCE

Oil Non-Oil Total Oil Non-Oil Total Oil Non-Oil Total

1 2 3 4 5 6 7 8 9 10

1976-77 0.19 51.24 51.43 14.13 36.60 50.74 -13.95 14.64 0.69

1977-78 0.16 53.92 54.08 15.51 44.69 60.20 -15.35 9.23 -6.12

1978-79 0.14 57.12 57.26 16.77 51.34 68.11 -16.63 5.78 -10.85

1979-80 0.19 64.00 64.18 32.67 58.76 91.43 -32.48 5.24 -27.24

1980-81 0.25 66.86 67.11 52.64 72.86 125.49 -52.39 -6.00 -58.38

1981-82 2.21 75.85 78.06 51.89 84.18 136.08 -49.68 -8.33 -58.02

1982-83 12.35 75.68 88.03 56.22 86.71 142.93 -43.87 -11.03 -54.89

1983-84 15.88 81.83 97.71 48.32 110.00 158.32 -32.44 -28.17 -60.61

1984-85 18.18 99.26 117.44 54.09 117.25 171.34 -35.91 -18.00 -53.91

1985-86 6.45 102.50 108.95 49.89 146.68 196.58 -43.45 -44.18 -87.63

1986-87 4.11 120.41 124.52 28.11 172.85 200.96 -23.99 -52.45 -76.44

1987-88 6.49 150.25 156.74 40.43 182.01 222.44 -33.94 -31.76 -65.70

1988-89 5.05 197.27 202.32 43.58 238.78 282.35 -38.53 -41.51 -80.04

1989-90 6.97 269.62 276.58 62.73 290.56 353.28 -55.76 -20.94 -76.70

1990-91 9.38 316.20 325.58 108.16 323.77 431.93 -98.78 -7.57 -106.35

1991-92 10.22 430.20 440.42 131.27 347.24 478.51 -121.05 82.95 -38.09

1992-93 13.79 523.09 536.88 171.42 462.33 633.75 -157.63 60.76 -96.86

1993-94 12.48 685.04 697.51 180.46 550.55 731.01 -167.98 134.49 -33.50

1994-95 13.09 813.65 826.74 186.13 713.58 899.71 -173.04 100.07 -72.97

1995-96 15.18 1048.36 1063.53 251.74 975.05 1226.78 -236.56 73.31 -163.25

1996-97 17.10 1171.07 1188.17 356.29 1032.91 1389.20 -339.18 138.16 -201.03

1997-98 13.11 1287.90 1301.01 303.41 1238.35 1541.76 -290.30 49.55 -240.76

1998-99 3.76 1393.77 1397.53 269.19 1514.13 1783.32 -265.43 -120.36 -385.79

1999-00 1.69 1593.93 1595.61 546.49 1605.88 2152.37 -544.80 -11.95 -556.75

2000-01 85.42 1950.29 2035.71 714.97 1593.76 2308.73 -629.55 356.53 -273.02

2001-02 101.07 1989.11 2090.18 667.70 1784.30 2452.00 -566.63 204.82 -361.82

2002-03 124.69 2426.68 2551.37 853.67 2118.39 2972.06 -728.98 308.29 -420.69

2003-04 163.97 2769.69 2933.67 945.20 2645.88 3591.08 -781.23 123.82 -657.41

2004-05 314.04 3439.35 3753.40 1340.94 3669.71 5010.65 -1026.90 -230.35 -1257.25

2005-06 515.33 4048.85 4564.18 1946.40 4657.69 6604.09 -1431.07 -608.84 -2039.91

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2006-07 845.20 4872.59 5717.79 2585.72 5819.35 8405.06 -1740.52 -946.75 -2687.27

2007-08 1141.92 5416.72 6558.64 3206.55 6916.57 10123.12 -2064.63 -1499.85 -3564.48

2008-09 1233.98 7173.57 8407.55 4199.68 9544.68 13744.36 -2965.70 -2371.11 -5336.80

2009-10 1328.99 7126.35 8455.34 4116.49 9520.86 13637.36 -2787.50 -2394.52 -5182.02

2010-11 1887.79 9541.43 11429.22 4822.82 12011.85 16834.67 -2935.03 -2470.42 -5405.45

2011-12 2679.15 11980.45 14659.59 7430.75 16023.88 23454.63 -4751.60 -4043.44 -8795.04

2012-13 3308.19 13035.00 16343.18 8918.71 17772.91 26691.62 -5610.52 -4737.92 -10348.44

2013-14 3832.48 15217.63 19050.11 9978.85 17175.48 27154.34 -6146.38 -1957.85 -8104.23

2014-15 3476.08 15494.18 18970.26 8428.70 18911.79 27340.49 -4952.62 -3417.62 -8370.23

EXPORTS OF PRINCIPLE COMMODITIES- US DOLLAR (BN)

Commodity / Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

1 2 3 4 5 6 7

1. Tea 620.4 736.2 851.1 867.3 805.5 682.2

2. Coffee 428.3 660.6 946.2 865.9 793.2 813.4

3. Rice 2372.3 2542.9 5030.7 6222.8 7782.7 7855.0

4. Other cereals 626.7 800.8 1146.2 1503.5 1186.4 860.6

5. Tobacco 915.7 874.7 836.0 924.5 1013.9 959.8

6. Spices 1253.9 1730.9 2734.1 2789.3 2503.5 2428.3

7. Cashew 590.5 618.8 916.1 747.5 842.2 910.3

8. Oil Meals 1650.8 2429.5 2461.6 3036.1 2821.4 1329.5

9. Oil seeds 650.0 1019.2 1712.5 1369.4 1294.2 1739.8

10. Fruits & Vegetables 1514.6 1445.0 1728.0 1796.3 2256.3 2154.8

11. Cereal preparations & miscellaneous processed items 446.6 582.4 805.0 917.5 1151.9 1257.4

12. Marine Products 2086.7 2615.6 3460.7 3462.8 5062.2 5509.7

13. Meat, dairy & poultry products 1570.1 2295.7 3160.7 3802.3 5316.5 5391.8

14. Iron Ore 5978.9 4872.1 4622.1 1651.3 1567.0 525.2

15. Mica, Coal & Other Ores, Minerals including processed minerals 2497.2 3707.9 3661.8 3809.2 4013.2 3901.6

16. Leather & leather products 3277.8 3822.8 4686.1 4777.8 5590.2 6025.7

17. Ceramic products & glassware 706.0 865.1 1050.7 1156.3 1294.4 1643.9

18. Gems & Jewellery 28639.1 42314.3 46314.1 43045.1 41379.4 41248.4

19. Drugs & Pharmaceuticals 8880.7 10460.8 13150.5 14425.4 14944.2 15430.9

20. Organic & Inorganic Chemicals 6264.9 8212.4 11396.4 11477.3 12309.9 12472.1

21. Engineering Goods 33618.9 50278.9 59923.3 59165.5 64078.5 73114.6

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22. Electronic Goods 5614.2 8445.7 9078.8 8258.5 7860.6 6258.0

23. Cotton Yarn/Fabs./made-ups, Handloom Products etc. 5317.4 7609.8 8987.9 9657.0 11090.4 10779.6

24. Man-made Yarn/Fabs./made-ups etc. 3602.7 4274.9 5069.5 4535.7 5189.1 5275.2

25. RMG of all Textiles 10717.2 11614.8 13710.7 12948.9 14994.2 16836.3

26. Jute Mfg. including Floor Covering 217.8 459.2 464.5 390.4 382.7 347.2

27. Carpet 756.0 1032.4 920.3 1093.1 1178.1 1360.4

28. Handicrafts excl. hand made carpet 713.0 760.1 993.4 988.3 1509.0 1378.1

29. Petroleum Products 28192.0 41480.0 56038.5 60865.1 63179.4 57042.3

30. Plastic & Linoleum 3001.1 4266.1 5674.5 5599.2 6160.3 5738.3

31. Other Commodities 16029.9 28306.8 34431.9 28251.2 24865.4 19263.5

Total Exports 178751.4 251136.2 305963.9 300400.7 314415.7 310533.9

IMPORTS OF PRINCIPLE COMMODITES- US DOLLAR (BN)

Commodity / Year 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15

1 2 3 4 5 6 7

1. Cotton Raw & Waste 261.7 136.6 221.0 453.4 392.7 507.1

2. Vegetable Oil 4703.9 5688.8 8119.1 9844.1 7278.8 10613.3

3. Pulses 2240.4 1648.8 1971.6 2452.6 1824.2 2790.6

4. Fruits & vegetables 657.8 877.1 1054.5 1244.8 1378.9 1664.9

5. Pulp and Waste paper 464.9 621.3 720.3 745.6 768.2 945.1

6. Textile yarn Fabric, made-up articles 838.1 1100.4 1430.5 1441.5 1507.6 1691.0

7. Fertilisers, Crude & manufactured 6693.2 6920.8 11124.3 8770.9 6306.8 7408.0

8. Sulphur & Unroasted Iron Pyrts 143.7 241.3 476.9 319.6 182.6 286.2

9. Metaliferrous ores & other minerals 5432.3 6472.8 8112.7 9143.7 8395.2 9302.4

10. Coal, Coke & Briquettes, etc. 8960.4 9804.1 17443.9 17007.7 16384.8 17811.6

11. Petroleum, Crude & products 87135.9 105964.4 154967.6 164040.6 164770.3 138324.7

12. Wood & Wood products 3214.2 3708.2 5024.3 5083.1 5120.7 5464.8

13. Leather & leather products 460.8 636.8 719.5 739.9 823.7 1005.6

14. Organic & Inorganic Chemicals 10395.5 13464.1 16717.5 16787.0 17464.5 18561.0

15. Dyeing/tanning/colouring mtrls. 1210.4 1599.0 2108.8 2171.0 2419.0 2443.7

16. Artificial resins, plastic materials, etc. 5785.0 7855.3 8834.9 9989.6 10456.0 12057.0

17. Chemical material & products 2982.7 3823.5 4549.4 4861.5 4877.9 5303.1

18. Newsprint 473.1 821.0 1030.4 804.0 891.8 838.8

19. Pearls, precious & Semi-precious stones 15925.9 33829.7 28039.6 22637.1 23849.3 22564.6

20. Iron & Steel 11573.4 14598.8 18254.7 17700.8 12658.6 16314.5

21. Non-ferrous metals 4498.7 6539.3 8407.2 9038.1 8856.8 10748.2

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22. Machine tools 2157.7 2962.6 3977.2 3720.7 3057.5 3138.2

23. Machinery, electrical & non-electrical 21321.3 26128.8 33099.2 30764.5 27091.4 28004.7

24. Transport equipment 14388.9 14900.7 18724.7 21288.9 19323.9 18402.7

25. Project goods 4682.7 6144.4 8810.2 6553.7 4535.8 3632.8

26. Professional instrument, Optical goods, etc. 2245.1 2777.8 3593.6 3756.1 3597.5 3716.8

27. Electronic goods 22228.1 27939.1 34081.1 32906.2 32378.4 36872.0

28. Medcnl. & Pharmaceutical products 3591.6 4202.7 5184.0 5465.2 5233.1 5431.3

29. Gold 28641.2 40546.9 56319.8 53694.8 28704.7 34407.2

30. Silver 961.9 1965.0 5155.0 1984.5 4458.3 4528.1

31. Other Commodities 14102.6 15849.4 21046.3 25325.8 25224.8 22768.8

Total Imports 288372.9 369769.1 489319.5 490736.7 450213.6 447548.3

TABLE 132 : EXPORTS OF SELECT COMMODITIES TO PRINCIPAL

COUNTRIES - US DOLLAR

203

(US $ million) Commodity/Country 2013-14 2014-15 1 2 3 Tea Germany 43.5 35.2 Iran 100.6 88.5 Iraq 0.2 0.2 Japan 25.6 24.4 Kazakhstan 50.4 54.1 Poland 12.0 10.7 Russia 108.8 96.6 U.A.E. 81.4 44.2 U.K. 59.6 57.2 U.S.A 71.5 67.3 Others 251.9 203.8 Total 805.5 682.2 Coffee Belgium 51.9 41.6 Germany 80.1 79.5 Italy 182.4 160.8 Latvia 5.3 6.2 Netherlands 4.7 5.6 Russia 37.0 57.7 Spain 13.2 13.6 Switzerland 6.4 8.2 U.K. 7.3 10.0 U.S.A 29.1 25.0 Others 375.8 405.2 Total 793.2 813.4 Rice Bangladesh 257.0 439.8 France 21.5 18.6 Kuwait 267.9 271.0 Saudi Arabia 1196.9 1293.7 Singapore 75.3 98.4 South Africa 176.1 145.4 U.A.E. 313.2 441.1 U.K. 144.1 157.5 U.S.A 166.2 155.1 Yemen Republic 222.4 244.0 Others 4942.1 4590.4

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Total 7782.7 7855.0 Tobacco Belgium 209.0 153.9 Germany 35.7 18.4 Netherlands 37.2 33.9 Russia 41.9 37.3 Saudi Arabia 45.8 58.4 Singapore 20.3 29.2 U.A.E. 82.9 78.9 U.K. 15.1 11.7 U.S.A 30.9 25.3 Yemen Republic 12.2 16.4 Others 482.9 496.4 Total 1013.9 959.8 Spices Bangladesh 59.1 55.7 Germany 80.3 74.3 Japan 41.8 47.6 Saudi Arabia 78.2 86.1 Singapore 70.2 46.2 Spain 37.6 40.8 Sri Lanka 54.6 67.6 U.A.E. 87.6 122.7 U.K. 104.0 101.0 U.S.A 391.8 409.6 Others 1498.3 1376.7 Total 2503.5 2428.3

INDIA'S OVERALL BALANCE OF PAYMENTS - RUPEES

Item/Year 2012-13 2013-14 2014-15 Credit Debit Net Credit Debit Net Credit Debit Net

1 11 12 13 14 15 16 17 18 19

A. Current account 1. Merchandise 16676.90 27321.46 -10644.56 19310.74 28159.18 -8848.45 19350.64 28164.75 -8814.11

2. Invisibles (a+b+c) 12188.93 6340.47 5848.46 14117.73 7146.79 6970.95 14500.96 7387.35 7113.61

a) Services 7924.88 4392.71 3532.17 9171.80 4749.23 4422.57 9508.40 4876.68 4631.72

i) Travel 978.81 643.33 335.48 1088.07 714.26 373.81 1245.42 935.41 310.01

ii)Transportation 943.00 806.05 136.95 1052.61 894.80 157.81 1067.98 989.25 78.73

iii) Insurance 121.19 76.62 44.56 128.49 67.60 60.89 134.53 68.35 66.18

iv) G.n.i.e. 31.26 44.22 -12.96 29.47 58.88 -29.41 33.21 58.71 -25.50

v) Miscellaneous 5850.62 2822.48 3028.14 6873.15 3013.69 3859.47 7027.26 2824.96 4202.30

of which: Software services 3583.48 128.56 3454.91 4206.20 151.75 4054.45 4472.82 165.82 4307.00

Business services 1547.80 1650.36 -102.57 1722.50 1645.70 76.80 1737.93 1691.90 46.02

Financial services 269.41 252.01 17.40 401.58 346.04 55.54 345.83 217.72 128.11

Communication services 91.77 40.30 51.48 145.61 63.35 82.26 122.24 62.36 59.88

b) Transfers 3704.64 220.71 3483.93 4257.16 309.92 3947.25 4289.37 281.88 4007.48

i) Official 25.10 41.98 -16.88 46.72 58.65 -11.93 19.70 64.50 -44.80

ii) Private 3679.54 178.73 3500.81 4210.44 251.26 3959.18 4269.67 217.39 4052.28

c) Income 559.41 1727.05 -1167.64 688.77 2087.64 -1398.87 703.19 2228.78 -1525.59

i) Investment income 392.13 1609.57 -1217.44 489.33 1917.68 -1428.35 485.50 2061.53 -1576.03

ii) Compensation of employees 167.29 117.48 49.80 199.44 169.96 29.48 217.69 167.25 50.44

Total Current account (1+2) 28865.83 33661.93 -4796.10 33428.47 35305.97 -1877.50 33851.60 35552.10 -1700.49

B. Capital account

1. Foreign investment (a+b) 11698.22

9151.69

2546.53

14906.78

13310.29

1596.50

18731.00

14235.27

4495.72

a) Foreign direct investment (i+ii) 2167.37 1085.51 1081.86 2638.94 1339.25 1299.69 3118.71 1122.43 1996.28

i) In India 1868.69 399.15 1469.54 2185.95 317.65 1868.30 2711.83 605.06 2106.76

Equity 1247.73 372.48 875.25 1533.23 287.49 1245.74 1951.65 589.63 1362.02

Reinvested earnings 537.37 0.00 537.37 544.24 0.00 544.24 549.93 0.00 549.93

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Other capital 83.58 26.67 56.91 108.48 30.16 78.32 210.25 15.44 194.81

ii) Abroad 298.68 686.37 -387.68 452.99 1021.59 -568.60 406.88 517.36 -110.48

Equity 298.68 386.14 -87.46 452.99 761.60 -308.61 406.88 250.00 156.87

Reinvested earnings 0.00 64.71 -64.71 0.00 70.70 -70.70 0.00 66.76 -66.76

Other capital 0.00 235.51 -235.51 0.00 189.30 -189.30 0.00 200.60 -200.60

b) Portfolio investment 9530.85 8066.18 1464.67 12267.84 11971.04 296.80 15612.29 13112.85 2499.45

i) In India 9450.11 7937.60 1512.51 12218.16 11907.13 311.03 15568.57 13070.04 2498.53

of which: FIIs 9439.89 7937.60 1502.28 12217.04 11907.13 309.91 15568.57 13070.04 2498.53

GDRs/ADRs 10.23 0.00 10.23 1.12 0.00 1.12 0.00 0.00 0.00

ii) Abroad 80.74 128.58 -47.84 49.68 63.91 -14.23 43.72 42.81 0.91

2. Loans (a+b+c) 8433.53 6742.79 1690.73 8134.42 7675.41 459.01 7573.73 7361.44 212.29

a) External assistance 257.47 204.21 53.26 282.39 220.43 61.97 354.16 253.73 100.43

i) By India 2.82 18.38 -15.56 2.74 14.78 -12.03 3.76 29.56 -25.80

ii) To India 254.65 185.83 68.82 279.65 205.65 74.00 350.40 224.17 126.23

b) Commercial borrowings 1501.58 1041.06 460.52 1827.60 1103.44 724.16 1735.84 1568.93 166.90

ii) By India 115.13 120.68 -5.54 98.51 35.64 62.88 98.42 16.53 81.90

ii) To India 1386.45 920.38 466.07 1729.08 1067.80 661.28 1637.41 1552.41 85.00

c) Short term to India 6674.47 5497.52 1176.95 6024.42 6351.55 -327.12 5483.74 5538.78 -55.04

i) Suppliers' Credit >180 days & Buyers' Credit 6485.03 5405.49 1079.54 6008.49 6270.93 -262.45 5356.89 5500.81 -143.92

ii) Suppliers' credit up to 180 days 189.44 92.03 97.41 15.94 80.61 -64.67 126.85 37.97 88.89

3. Banking capital (a+b) 4554.07 3651.40 902.68 6544.82 5028.18 1516.64 5509.76 4788.93 720.83

a) Commercial banks 4518.66 3642.09 876.56 6514.91 5028.18 1486.73 5402.46 4788.93 613.53

i) Assets 654.22 726.04 -71.82 865.60 1314.23 -448.64 1034.41 1128.95 -94.54

ii) Liabilities 3864.44 2916.05 948.39 5649.31 3713.94 1935.37 4368.05 3659.98 708.07

of which: Non-resident deposits 3551.92 2745.41 806.51 5331.98 2951.99 2380.00 3868.67 3007.43 861.25

b) Others 35.42 9.30 26.11 29.90 0.00 29.90 107.30 0.00 107.30

4. Rupee debt service 0.00 3.13 -3.13 0.00 3.04 -3.04 0.00 4.89 -4.89

5. Other capital 970.73 1250.20 -279.46 1338.01 2009.03 -671.02 1703.75 1609.76 93.99

Total capital account (1 to 5) 25656.56 20799.22 4857.34 30924.03 28025.95 2898.08 33518.24 28000.29 5517.94

C. Errors & omissions 145.78 0.00 145.78 49.63 109.67 -60.04 90.68 128.88 -38.20

D. Overall balance (A+B+C) 54668.17 54461.15 207.02 64402.13 63441.59 960.54 67460.52 63681.28 3779.25

E. Monetary movements (i+ii) 0.00 207.02 -207.02 0.00 960.54 -960.54 0.00 3779.25 -3779.25

i) I.M.F. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

ii) Foreign exchange reserves (Increase- / Decrease+) 0.00 207.02 -207.02 0.00 960.54 -960.54 0.00 3779.25 -3779.25

References/Bibliography:

en.wikipedia.org/wiki/Balance_of_payments/

www.investopedia.com/articles/03/060403.asp

www.economicshelp.org/blog/glossary/balance-payments/

Economic Survey (2013-14), http://indiabudget.nic.in

Reserve Bank of India, www.rbi.org

Search Engine:- Google.com