Balance of Payments

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India’s Balance of Payments Concepts, Compilation and Recent Scenario 1950-51 to 2003-04

EPW Research Foundation* February 2005

* An original note on the subject was published in the Economic and Political Weekly (EPW) of November 13-20, 1993. The same has been thoroughly revised and updated by Ms. Shilpa Jain for publication on the website www.epwrf.res.in Mrs. Rema K. Nair undertook page-making.

Contents
Section No. Title List of Exhibits and Appendices Page No. i

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Key Concepts Current and Capital Accounts Merchandise on FOB/ CIF basis Invisibles Capital Account Sources of BOP Data Difference between RBI Balance of payments data and customs data Apparent gaps in BOP data An Overview of India’s Balance of Payments Notes

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III

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List of Text Tables Text Table 1: India’s Foreign Trade: A Comparison of DGCI & S and RBI Data Foreign Exchange Reserves: 1950-51 to 2003-04 Financing of Current Account Deficits: 1950-51 to 2003-04 Balance of Payments-Selected Indicators: 1950-51 to 2001-02

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List of Exhibits and Appendices
Title Exhibits Exhibit A: Estimation of Invisible Accounts A Comparison of RBI Classification with the IMF Classification (IMF BOP MANUAL) Estimation of Invisible Accounts A Comparison of RBI Classification with the IMF Classification (IMF BOP Yearbook) Appendices Appendix 1: Balance of Payments: 1950-51 to 1989-90 (Rs. Crore / Dollar Million) 1990-91 to 2003-04 (Rs. Crore) 1990-91 to 2003-04 (US Dollar Million) Break-up of Invisibles on Current Account Travel Account (i) (ii) (C) (i) (ii) (D) (i) (ii) (E) (i) (ii) (F) (i) (ii) (G) (i) (ii) (H) (i) (ii) 3: (A),(B) (C) 4: Transportation Account : 1956-57 to 1989-90 (Rs. Crore) 1990-91 to 2001-02 (Rs. Crore/ Dollar Million) Insurance Account : 1956-57 to 1996-97 (Rs. Crore) 1997-98 to 2001-02 (Rs. Crore/ Dollar Million) Investment Income Account : 1956-57 to 1996-97 (Rs. Crore) 1997-98 to 2001-02 (Rs. Crore/ Dollar Million) Government not included elsewhere Account : 1956-57 to 1989-90 (Rs. Crore) 1990-91 to 2001-02 (Rs. Crore/ Dollar Million) Miscellaneous Account : 1956-57 to 1989-90 (Rs. Crore) 1990-91 to 2001-02 (Rs. Crore/ Dollar Million) Official Transfer Payments Account : 1956-57 to 1989-90 (Rs. Crore) 1990-91 to 2001-02 (Rs. Crore/ Dollar Million) Private Transfer Payments Account : 1956-57 to 1989-90 (Rs. Crore) 1990-91 to 2001-02 (Rs. Crore/ Dollar Million) Foreign Inevestment Private Foreign Investment Foreign Investment Inflows NRI Deposits A Inflows under FCNR and NR(E)RA Accounts NRI Deposits Outstanding External Transactions as per CSO’s National Account Statistics 19 23 26 29 35 36 38 40 41 42 45 46 47 48 50 52 54 55 57 Page No.

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India’s Balance of Payments
Concepts, Compilation and Recent Scenario: 1950-51 to 2003-04 I Key Concepts balance of payments statement is essentially a double entry system of record for a given period of an economy’s two-way international transactions in the form of goods and services, receipts and payments of incomes, transfers without quid pro quo and financial claims and liabilities. With a view to standardising the concepts and definitions, classificatory schemes and conventions applied in the compilation of balance of payment statistics by various countries, the International Monetary Fund (IMF) has prescribed a Balance of Payment Manual.1 India, as in the case of other member countries of the IMF, has adopted the same as a conceptual and methodological basis for compiling her balance of payment account. However, there exist some departures from the IMF framework due to the constraints of data availability and to take account of the country’s institutional structure.2 Principally, the balance of payment (BOP) account records transactions between a resident economic entity and the rest of the world. Though the resident status of an individual is conceived in terms of the...
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