NAME : ROHIT MAKHIJA

CLASS : SYBBA (A)

ROLL NO: 18

SUBJECT : INTERNATIONAL BUSINESS

TOPIC : ANALYSIS OF INDIAS BALANCE OF PAYMENT

SUBMITTED TO: DR. DEEPA DANI MAM

Introduction:
India's transactions with the rest of the world are reflected in its
Balance of Payments (BoP), which is an important indicator of the
country's economic health. In order to comprehend India's economic
situation, we will examine the various components of the BoP figures
for the years 2021 and 2022 in this analysis.

Current Account:
The net flow of goods and services between India and other nations
is depicted in the BoP's current account. India's current account
showed a deficit of $26.5 billion in 2021 and 2022, indicating that
imports of goods and services were greater than exports. Rising gold
and crude oil prices, two major imports for India, were the primary
contributors to the current account deficit. India's exports were also
affected by the global trade disruptions brought on by the pandemic.

Capital Account:
The net capital flow between India and other nations is depicted in
the BoP's capital account. India's capital account showed a surplus of
$89.3 billion in 2021 and 2022, indicating a net inflow of capital. This
incorporates unfamiliar ventures, advances, and different types of
capital inflows. The primary drivers of the capital account surplus
were an increase in foreign portfolio investments in the Indian stock
markets and FDI in the digital and technology industries.

Omissions and Errors:

The blunders and exclusions account in the BoP mirrors the
unrecorded or unaccounted inflows or surges yet to be determined
of installments. In 2021-22, India's mistakes and oversights account
showed a little overflow of $0.78 billion, demonstrating that there
may be a few unrecorded exchanges.

Overall Balance:
The combined effects of the capital account and the current account
determine the overall position of the balance of payments. A total
surplus of $63.5 billion was created by combining the current
account deficit and the capital account surplus in 2021 and 2022. This
indicates that there was a surplus in the balance of payments overall
because capital inflows were sufficient to finance the current account
deficit.

Monetary Movements:
The transactions that are associated with India's monetary policy,
such as the purchase and sale of foreign currency reserves by the
Reserve Bank of India (RBI), are reflected in the monetary
movements account in the BoP. In 2021-22, India's money related
developments account showed a deficiency of $63.5 billion,
demonstrating that there was a net outpouring of unfamiliar cash
because of financial exchanges.

IMF:
India's transactions with the International Monetary Fund (IMF), such
as loans and repayments, are reflected in the BoP account of the IMF.
The IMF account did not see any activity in the years 2021 and 2022.
Reserves and Monetary:
The BoP's reserves and monetary account shows how India's foreign
exchange reserves have changed. India's reserves and monetary
account showed a deficit of $63.5 billion in 2021 and 2022, indicating
that the country lost the same amount of foreign exchange reserves.

Due to the substantial capital inflows, India's overall balance of

payments position in 2021 and 2022 is positive. However, the net
decrease in foreign exchange reserves was caused by the persistent
current account deficit and the outflow of foreign currency from
monetary transactions. Policymakers must ensure that India's current
account deficit remains manageable and sustainable over the long
term in order to reduce its vulnerability to external shocks.
By increasing India's exports and decreasing its reliance on imports,
particularly for essential goods like gold and crude oil, this can be
accomplished. The public authority can likewise boost homegrown
creation and advance areas, for example, assembling and
agribusiness to diminish the import bill. In addition, policymakers can
work to increase FDI inflows to finance the current account deficit
and encourage sustainable growth over the long term.
India could also look into expanding its services industry, which has
made a big difference to the GDP and exports of the country. Services
like IT, healthcare, tourism, and education, all of which have
significant growth potential and can contribute to increasing India's
service exports, can be promoted by the government.

All in all, the BoP figures for India in 2021-22 feature the requirement
for policymakers to zero in on decreasing the ongoing record
shortage and expanding products to make the country's outside
position more manageable. Although the substantial capital inflows
from FDI and foreign portfolio investments are encouraging,
policymakers must ensure that these inflows are directed toward
productive industries that support long-term, sustainable growth. In
addition, India's external position can be improved by reducing its
reliance on imports and diversifying its exports through policies that
promote the services sector.