An Economics and environment of business project.INDEX
What is balance of payment?
Balance of Trade & balance of payment.
Components of balance of payment.
India’s foreign exchange reserve.
India’s balance of payment.
trade.Balance of Payment of a country is one of the important indicators for International trade, whichsignificantly affect the economic policies of a government. As every country strives to a have afavourable balance of payments, the trends in, and the position of, the balance of payments willsignificantly influence the nature and types of regulation of export and import business in particular.
Balance of Payments is a systematic and summary record of a country’s economic and financial
transactions with the rest of the world over a period of time. The balance of payments is a statistical statement that systematicallysummarizes, for a specific time period, the economic transactions of an economy with the rest of theworld. Transactions, for the most part between residents and nonresidents, consist of those involvinggoods, services, and income; those involving financial claims on, and liabilities to, the rest of the world;and those (such as gifts) classified as transfers, which involve offsetting entries to balance
in anaccounting sense
one-sided transactions.(a) Transactions in good and services and income between an economy and the rest of the world,
(b) Changes of ownership and other changes in that country’s monetary gold, SDRs, and claims on a
ndliabilities to the rest of the world, and(c) Unrequited transfers and counterpart entries that are needed to balance, in the accounting sense,any entries for the foregoing transactions and changes which are notmutually offsetting.
A country’s balanc
e of payments can also commonly defined as the record of transactions between itsresidents and foreign residents over a specified period. Each transaction is recorded in accordance withthe principles of double-entry bookkeeping, meaning that the amount involved is entered on each of thetwo sides of the balance-of-payments accounts. Consequently, the sums of the two sides of thecomplete balance-of-payments accounts should always be the same, and in this sense the balance of payments always balances.However, there is no bookkeeping requirement that the sums of the twosides of a selected number of balance-of-payments accounts should be the same, and it happens thatthe (im)balances shown by certain combinations of accounts are of considerable interest to analysts and
government officials. It is these balances that are often referred to as ―surpluses‖ or ―deficits‖ in the
balance of payments.The Balance of Trade takes into account only the transactions arising out of the exports and imports of