BALANCE
OF PAYMENT: ECONOMY
NEWS: India's Current Account: Registered a surplus in Q4
(Jan-Mar) of the 2023-24 financial year, first time in 11 quarters.
WHAT’S IN THE NEWS?
Balance of Payments Overview
- Definition: Records transactions in
goods, services, and assets between residents of a country and the rest of
the world over a specified period, typically a year.
- Main Accounts:
- Current Account: Records exports and
imports of goods and services, and transfer payments.
- Capital Account: Records all international
purchases and sales of assets like money, stocks, and bonds.
Key Points
- Deficit vs. Surplus:
- Deficit: Not always bad; can
indicate a need to import capital goods to build production capacity.
- Surplus: Not always good; may not
signify a healthy economy.
- Trade Deficit: Suggests strong underlying
demand in the economy.
- Account Balance: Current and capital
accounts move in opposite directions; a current account deficit is matched
by a capital account surplus and vice versa.
- Overall BoP: Ultimately balances out,
with no aggregate deficits or surpluses.
Source
: https://indianexpress.com/article/explained/explained-economics/how-to-read-indias-balance-of-payments-9435678/#:~:text=What%20is%20Balance%20of%20Payments,and%20out%20of%20the%20country.