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October 2012
Balance of payments
Balance of payments (BoP) is a statement that records all monetary transactions between a country and
the rest of the world.
Transactions include payments for the country's exports and imports of goods, services, financial
capital, and financial transfers.
The BoP account summarizes international transactions for a specific period, usually a quarter, and are
prepared in a single currency, typically the domestic currency for the country concerned.
BoP consists of the current account, capital account and change in foreign reserves.
The change in foreign reserves is the net of capital and current account.
CURRENT ACCOUNT
CAPITAL ACCOUNT
NRI deposits
Banks borrowing from parent body ( e.g. Citi bank
India borrowing from Citi Cop)
Foreign Aid
Trade Balances
(FDI)
+
Net Services
+
Foreign Portfolio Investment
(FPI)
+
+
Banking capital and loans
Net Investment Income
(remittances, interest, dividends)
+
ECB, Trade Credits
Current Account
Capital Account
2500
2,236
1,899
1,743
2000
US $(bn)
1,497
1500
Exports
Imports
1000
522
500
256 226
475
324
307
299
399
0
Brazil
Russia
India
China
US
UK
India, US and UK have negative trade balance i.e. trade deficit. This is because their imports are greater than their exports.
Nominal GDP (US $ bn)
Brazil
2,493
10.3%
9.1%
Russia
1,850
28.2%
17.5%
India
1,850
16.6%
25.7%
China
7,298
26.0%
23.9%
US
15,076
9.9%
14.8%
UK
1,508
19.8%
26.5%
Source: CEIC, IMF, Morgan Stanley Research. Data as on FY 2011
5
Petroleum (Crude
& Products)
18%
Gems & Jewellary
15%
Others
37%
Others
49%
Transport
Equipments
7%
Machinery And
Instruments
5%
Other Commodities
6%
Gold
12%
Perls Prcus
Semiprcs Stones
6%
Electronic Goods
7%
Export
$309.8 bn
16.8% of GDP
$ 22.1 bn
1.2% of GDP
Net FDI
Less
Import
$499.5bn
27.1% of GDP
Add
$17.2 bn
0.9% of GDP
FII
Equals
Trade balance
Add
Remittances
Add
$ - 189.7 bn
10.3% of GDP
Loans
$19.3 bn
1.05% of GDP
$29 bn
1.6%% of GDP
Add
Add
Net Services
$ 35.04 bn
1.9% of GDP
Others
$ 47.6 bn
2.6% of GDP
Banking capital
$16.2 bn
0.9% of GDP
Add
Add
Others
$ - 6.9 bn
0.4% of GDP
Lent out
+ve
Net of Current and Capital
Account
-ve
Deficits are sourced from foreign reserves
The fall in Forex reserves from March 11 to March 12 ($ 302.9 bn - $ 291.6 bn= $10.9 bn) is primarily
due to the outflow of $ 10.4 bn, used to fund the difference between the Capital & Current Account
BoP is colloquially defined as net of Capital and Current Account , which is the change in foreign reserves.
3Q FY09: Negative BoP which means net foreign exchange outflow and it corresponds to INR depreciating from Rs 45 to
a dollar to Rs 50 to a dollar
Surplus in BoP
Appreciation of INR
Deficit in BoP
Depreciation of INR
Source: RBI,MOSL
9
Disclaimer
This presentation shall not constitute any offer to sell or solicitation of an offer to buy units of any of
the Schemes of the DSP BlackRock Mutual Fund.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
10
FY09
Q4 FY11
Q4 FY12
FY11
(US$88/bbl)
FY12
(US$108/bbl)
FY13
(US$107/bbl)
FY14
Item
Current Account
% of GDP
Trade balance
- Exports
- Imports
o/w Oil imports
Invisibles
o/w income from forex reserv.
Capital Account
Foreign investment
- FDI
- FII+
Banking capital
- NRI deposits
Short term credit
ECBs
External assistance
Others
Overall balance
Memo
FY10
(US$69/bbl)
-28.8
-2.3
-118.7
189.0
307.7
93.7
89.9
10.9
12.3
8.4
22.4
-14.0
-3.2
4.3
-1.9
7.9
2.6
-1.5
-16.5
-38.4
-2.8
-118.4
182.2
300.6
87.1
80.0
5.9
52.7
50.4
18.0
32.4
2.1
2.9
7.6
2.8
2.9
-13.0
14.3
-6.3
-1.7
-30.0
77.4
107.4
0.0
23.7
0.0
9.2
1.3
1.1
0.2
-0.8
0.9
2.7
3.0
0.8
2.3
2.9
-21.7
-4.5
-51.6
80.0
131.6
0.0
29.9
0.0
16.6
15.3
1.4
13.9
2.0
4.7
0.2
2.3
0.3
-3.4
-5.1
-46.0
-2.7
-130.6
250.6
381.2
106.1
84.6
7.0
62.1
39.7
9.4
30.3
5.0
3.2
11.0
12.5
4.9
-11.0
16.1
-78.2
-4.2
-189.8
309.8
499.6
155.6
111.6
7.0
67.8
39.2
22.1
17.2
16.2
11.9
6.7
10.3
2.3
-6.9
-10.4
-70.5
-3.8
-183.5
327.0
510.5
149.0
113.0
7.0
74.0
36.0
20.0
16.0
12.0
12.0
10.0
12.0
4.0
0.0
3.5
-77.0
-3.4
-202.0
357.0
559.0
156.0
125.0
7.0
105.0
55.0
25.0
30.0
15.0
15.0
15.0
16.0
4.0
0.0
28.0
-34.9
-2.7
1.7
-19.7
-7.5
17.0
11