Balance of Payments

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INSTITUTE OF MANAGEMENT STUDIES
MBA (Financial Administration) SEMESTER IV

MAJOR RESEARCH PROJECT ON

BALANCE OF PAYMENTS

SUBMITTED TO SUBMITTED BY Mr. MANEESHKANT ARYA ARUN SHRIVASTAVA CERTIFICATE

INSTITUTE OF MANAGEMENT STUDIES DAVV, INDORE

This is to certify that Mr. Arun Kumar Shrivastava, student of MBA (Financial Administration) Sem IV has worked under my supervision in the presentation of his research project titled “Balance Of Payment & Its Implications”.

The project embodies the work of the candidate himself. The candidate has put in the requisite attendance required by the curriculum and fulfils the requirement for the award of the degree of MBA (Financial Administration) from DAVV, Indore.

Date: 20-april-09 Maneeshkant Arya Faculty Place: Indore IMS, DAVV

Prof.

DECLARATION

I hereby declare that this project report titled “Balance Of Payment & Its Implications”, is submitted to Institute of Management Studies is a bona-fide work undertaken by me and it is not submitted to any other University or Institute for the award of any Degree / Diploma / Certificate.

Date: 20-April- 09

Place: Indore Shrivastava)

(Arun Kumar

ACKNOWLEDGEMENT
I acknowledge with the sincerity and sense of gratitude the help rendered to me by various person in compiling my project. First and foremost I wish to express my heartiest gratitude to Mr. Maneeshkant Arya , Institute of Management Studies, whose excellent guidance and supervision enabled me to bring this shape to my project. I wish to extent my sincere thanks to Dr. P.N. Mishra, Director ,Institute of Management Studies, Indore for making all facilities available to me during my project. Last but not the least my thanks are also due to our staff of IMS department and my friends whose invaluable suggestions enabled me to complete this project successfully.

Arun Kumar Shrivastava

INTRODUCTION

In economics, the balance of payments, (or BOP) measures the payments that flow between any individual country and all other countries. It is used to summarize all international economic transactions for that country during a specific time period, usually a year. The BOP is determined by the country's exports and imports of goods, services, and financial capital, as well as financial transfers. It reflects all payments and liabilities to foreigners (debits) and all payments and obligations received from foreigners (credits). Balance of payments is one of the major indicators of a country's status in international trade, with net capital outflow. The balance, like other accounting statements, is prepared in a single currency, usually the domestic. Foreign assets and flows are valued at the exchange rate of the time of transaction.

Balance of Payment of a country is one of the important indicators for International trade, which significantly affect the economic policies of a government. As every country strives to a have a favourable balance of payments, the trends in, and the position of, the balance of payments will significantly influence the nature and types of regulation of export and import business in particular. Balance of Payments is a systematic and summary record of a country’s economic and financial transactions with the rest of the world over a period of time. The balance of payments is a statistical statement that systematically summarizes, for a specific time period, the economic transactions of an economy with the rest of the world. Transactions, for the most part between residents and nonresidents, consist of those involving goods, services, and income; those involving financial claims on, and liabilities to, the rest of the world; and those (such as gifts) classified as transfers, which involve offsetting entries to balance —in an accounting sense—one-sided transactions. (a) Transactions in goods and services and income between an economy and the rest of the world, (b) Changes of ownership and other changes in that country’s...
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