From UPSC perspective, the following things are important :
Prelims level : BoP, BoT, Current Account
Mains level : BoP Crisis
India’s balance of payments this year is going to be “very very strong” on the back of significant improvement in exports and a fall in imports said the Commerce and Industry Ministry.
Try this PYQ:
Q.In the context of India, which of the following factors is/are contributor/contributors to reducing the risk of a currency crisis? (CSP 2019)
- The foreign currency earnings of India’s IT sector
- Increasing the government expenditure
- Remittances from Indians abroad
Select the correct answer using the code given below.
(a) 1 only
(b) 1 and 3 only
(c) 2 only
(d) 1, 2 and 3
Balance of Payment
- BOP is the oldest and the most important statistical statement for any country.
- In a nutshell BOP of a country is “a systematic record of all economic transactions between the residents of one country with the residents of the other country in a financial year”.
- Economic Transactions include all the foreign receipts and payments made by a country during a given financial year.
- Foreign receipts include all the earnings and borrowings by a country from the other countries.