BOP or Balance of International Payments is the systematic and summary record of a country’s economic and financial transactionswith the rest of the worldover a period of time. As per IMF, BOP is a statistical statement for a given period showing: (a) transactions in goods & services and income between an economy and the rest of the world; (b) changes of ownership and other changes in that country’s monetary gold, SDRs, and claims on and liabilities to the rest of the world; and (c) unrequited transfersand counterpart entries that are needed to balance, in the accounting sense any entries for the foregoing transactions and changes which are not mutually offsetting. – IMF, Balance of Payments Manual.

1. 1
BALANCE OF PAYMENTS
BOP or Balance of International
Payments is the systematic and
summary record of a country’s
economic and financial transactions
with the rest of the world over a
period of time.

2. 2
As per IMF:
BOP is a statistical statement for a given period
showing: (a) transactions in goods & services and
income between an economy and the rest of the world;
(b) changes of ownership and other changes in that
country’s monetary gold, SDRs, and claims on and
liabilities to the rest of the world; and (c) unrequited
transfers and counterpart entries that are needed to
balance, in the accounting sense any entries for the
foregoing transactions and changes which are not
mutually offsetting. – IMF, Balance of Payments
Manual.

3. 3
Difference between BOP and BOT
Balance of Trade:
only exports and imports of merchandise or
goods , i.e. only visibles.
• Hence does not show the services (shipping,
insurance, payment of interest, royalties,
tourist spendings, etc.)
BOP:
both visibles and invisibles.

4. 4
Nature of BOP accounting
• Follows double entry book keeping
system.
• Each transaction has a debit and credit
• Has to balance (if not : errors & omissions
entry)

5. 5
Components of BOP
Various entries grouped under 4 categories
or accounts (parts)
• A) Current Account
• B) Capital Account
• C) Unilateral Payments Account
• D) Official Settlements Account.

6. 6
Components of BOP
Balance of payment (BoP) comprises:
• current account,
• capital account,
• errors and omissions and
• changes in foreign exchange reserves.

7. 7
Current Account
• Is a summary record of a nation’s goods and invisibles
transactions with the rest of the world.
• All transactions which give rise to or use up National
Income.
• Includes 2 major items:
Merchandise exports & imports
Invisible exports & imports
• Exports = credit entry ( i.e. claims on foreigners)
• Imports = debit entry (i.e.claims on home country)

8. 8
Invisibles
• Invisibles include:
a. non factor services:
–travel, transportation, insurance, Government not included
elsewhere (GNIE) and miscellaneous, (which includes
communication, construction, financial, software, news agency,
royalties, management and business services)
b.income
c. private transfers ( NRI remittances, gifts ) and
official transfers (Grants) ( for which no quid pro quo)
• Non Factor Services include:
1. export of software services
2. travel and transportation (tourist spending,
shipping etc,)

9. 9
Current account balance
• Current account balance is synonymous with net
foreign investment.
• A current account surplus means that:
– The country has positive net foreign investment (i.e.,
the country is acting as a net lender to or investor in the
rest of the world).
– The country is producing more ( and has more
income from this production) than it is spending on
goods and services.
– such a country is saving more than it is investing
domestically
• A deficit = the nation is a net borrower or domestic
savings are less than domestic investment.

10. 10
Capital Account
• Shows the capital inflows and outflows.
• =Claims and liabilities which go to finance the
deficit on current a/c or absorb its surplus.
• Short Term
• Long Term
• Capital Outflow = Debit ( eg. Indian inv in a foreign
country, inv in foreign securities, govt.loans to foreign
countries)
• Capital Inflow = Credit ( FDI by a foreign co. in
India, loans to Govt. from foreign countries, NRI
deposits).
• Also ST investments from abroad (incl FIIs).

11. 11
• The interest on loans and dividends/profits
received are current account;
• while the loan and FDI are capital account
transactions.

12. 12
Capital Account components
• Capital inflows can be classified by instrument (debt
or equity) and maturity (short or long term).
• The main components of capital account include
foreign investment, loans and banking capital.
• Foreign investment comprising foreign direct
investment (FDI) and portfolio investment represents
non-debt liabilities, while loans (external assistance,
external commercial borrowings and trade credit) and
banking capital including non-resident Indian (NRI)
deposits are debt liabilities.

13. 13
Unilateral Transfer Account
• = Gifts. No quid pro quo.
• One-sided transactions
• Include private remittances, govt grants,
pension payments, disaster relief, etc.
• If received = credit; if paid = debit
• Now included in Other Receipts.

14. 14
Official Settlement Account
• =Monetary Movement
• Official reserves represent the holdings by
the Government (or official agencies) of the
means of payment that are generally
accepted for the settlement of international
claims.

15. 15
Causes of BOP disequilibrium
• Disequilibrium = there is surplus or deficit
in BOP
• Deficit = demand for forex exceeds the
supply
• Reasons:
– Economic factors
– Political factors
– Sociological factors

16. 16
Economic factors
1. Development Disequilibrium:
Large scale development expenditure =
increase in purchasing power + increase in
demand & prices.
--Leads to huge imports (also of Capital
Goods)
--Hence adverse BOT adverse BOP.

17. 17
2. Capital Disequilibrium
• Due to cyclical fluctuations in general business
activity.
• If domestic economy experiences a boom, while
the rest of the world not so
--then more purchasing power & demand and higher
prices
--hence more imports
• But exports difficult because of slackness in world
economy.
• Hence……

18. 18
3. Secular Disequilibrium
• If long term BOP problem, then it is due
to some secular trends in the economy.
• If domestically: persistent high demand and
high domestic prices (eg.USA) then imports
will always be more than exports.
• ( if high production costs locally: but high
disposable incomes and hence very high aggregate
demand and high prices….)

19. 19
4.Structural Disequilibrium
Affects exports & imports
• Because of development of alternative
sources of supply,
• discovery of better substitutes,
• exhaustion of productive resources,
• changes in transport routes and costs etc.

20. 20
II. Political factors
• Continuous political instability, wars, etc.,
will lead to capital outflows and inadequacy
of domestic investment and production
• Hence BOP problems.

21. 21
III. Social factors
• Changes in tastes, preferences, fashions etc.,
will affect the exports and imports.
• Hence BOP…

22. 22
Correction of Disequilibrium
• Automatic Correction & Deliberate Measures
• Automatic: If adverse BOP fall in the
external value of the domestic currency
--So, exports will become cheaper and imports
will become costlier
--this will restore …

23. 23
Deliberate Measures
1. Monetary Measures:
a) Contraction in money supply —will
reduce purchasing powerreduce demand
-- so less imports
b) fall in prices cheaper—so more
exports

24. 24
Devaluation
• Exports cheaper and imports costlier
• E.g.: 1966 June: 4.76 to 7.50

25. 25
Exchange control
• To conserve forex
• Only through ADs
• Central Bank

26. 26
Trade Measures
• Export incentives
• High import duties and restrictions
• Canalisation

27. 27
Other Measures
• Getting foreign loans
• Foreign assistance, Aid…
• Development of tourism
• Export of services, BPOs, ITES, etc.

28. 28
BOP: INDIA
• Because of the trade deficit, India has had
BOP deficits in most of the years
• Though its effect has been mitigated to a
great extent by invisible surplus.
• But this problem has increased the
country’s dependence on external capital
markets and increased its vulnerability to
external shocks.

29. 29
• During the I FYP: no BOP problem because of
the huge sterling balances India had at the time of
independence.
• In 1950-51: our forex reserves were equal to
158% of our merchandise imports.
• But by 1957-58 the reserves came down to about
1/3 of the level in 50-51 and resulted in shortage.
• So, we got aid from Aid India Consortium and
drawals from IMF.—also stringent import
controls started.
• 1966 Re was devalued : to improve exports

30. 30
• In 1972-73: we had a trade surplus of Rs.104 cr.
• But then came the I Oil Shock: 4 fold increase in
international crude prices between Sept1973 and
April, 74.
• But we managed somehow this and during 1976-
77 to 1979-80: an improvement in BOP.
• In 1976-77, there was even a small trade surplus
of Rs.72 cr.
• But the main reason for the improvement in BOP
was the sharp increase in inflow of remittances
from our emigrant workers,esp from Gulf.

31. 31
• But then came the II Oil Shock in 1979-80: trade
deficit shot up from Rs 2200cr in 78-79 to Rs 6,200 cr
in 1980-81.
• Also a gradual decline in net receipts from invisibles,
while the trade deficit widened.
• An important reason for the BOP problem in 1980s
and since then is the change in source of financing
the large current a/c deficit.
--Until the beginning of the 80’s; almost the entire
deficit was financed thru inflows of concessional
assistance (hence, debt-service burden low)
--this was drastically replaced by commercial debt—to
pvt creditors, incl com banks and NRIs

32. 32
• Invisible surpluses have traditionally financed a
large part of India’s trade deficits
--but there was a steep fall in this since 80’s.
• In 1980-81: net invisibles financed nearly 73% of
trade deficit.
• During 6th Plan(1980-85): it was on an average >
60%.
• But by 1990-91: it dropped to about 13% only.
• Hence, was forced to go for external
(commercial) sources to meet our payments
obligations—crisis….pledging gold….

33. 33
• Made worse by the falling trend in net
invisibles
• Why:
Rise in invisibles payments: due to rising
interest and service payments on foreign
loans & credits.
-- In 1990-91, the Debt service ratio was
35.3%. In 2000-01, it was 17.3%
(now ,2004-05, only around 6.2%).

34. 34
Liberalisation and after
With the ec liberalisation: improvement
• Marked improvement in the coverage ratio i.e. ratio of export
bill to import bill
• And inflow of invisibles
• In 1990-91 it was only 2.5 months (bare minimum norm =3
months of import). In July 1991 only 15 days !
• now (‘04-05) more than 14.3 months. (in ‘03-04, it was 16.9)
• As a result, there was surplus in the Capital a/c of BOP (esp.
during 1996-97 to 1998-99)
• So, comfortable BOP
• The debt creating flows as % of total capital flows which
averaged 97% during the 7thPlan(85-90) declined to less than
18% by 94-95.

35. 35
Recent Trends
• The year 2001- 02, which recorded a
current account surplus for the first time
in 23 years, is a landmark year in the
history of the BOP of India.
• This resulted from the vibrant trends in
respect of the invisibles over the past
one decade or so.

36. 36
However…
• After 3 years of surplus, the current a/c
reverted to the previous situation with a
deficit or $5.4 bn in 2004-05.
• This was caused by a 147% increase in
merchandise trade deficit which far
outstripped the increase in invisible
surplus.
• and continues to be in deficit.

37. 37
Remittances
• Emigrant remittances, the single most important
source of India's invisible earnings for long, exhibited
a robust growth, registering a more than 6-fold
growth from $ 2 billion at the start of 1990s to almost
$ 13 billion by 2000-01, forming 2.7 per cent of GDP.
• Following the heavy inflow of invisible receipts,
India’s Current a/c deficit narrowed down during the
90’s and the nation enjoyed a current a/c surplus in
2001-02 when the merchandise deficit of $12.7bn
was more than offset by the invisible surplus of over
$14bn.
• Similarly, in 02, and 03.

38. 38
• India continues to remain the highest remittance
receiving country in the world.
• In 2004, inward remittances into India were US$21.7 billion.
(3% of our GDP)
• This made India the highest remittance receiving country in
the world, followed by China (US$21.3 billion), Mexico
(US$18.1 billion), France (US$12.7 billion) and Philippines
(US$11.6 billion).
• India’s share in total global remittances of $225.8 billion in
2004, was almost 10 %.
(Global Economic Prospects, 2006; World Bank).
• In 2007, India received $27bn (out of a total of $318 bn)—as
per World Bank’s Migration and Remittances Fact Book,
2008.

39. 39
Paradigm shift in services trade
• While the period up to the 1980s was dominated by
tourism earnings, the second half of the 1990s
witnessed an unprecedented jump in India's earnings
from newer activities like software service exports
and other IT-related skill-intensive exports.
• Software services have shown spectacular growth
while also emerging as the most important source of
miscellaneous services earnings, increasing from $
0.3 billion in 1993-94 to $ 7.2 billion in 2001-02,
with its share rising from less than 3 % to over 20 %
of total invisibles receipts during this period.

40. 40
• The growth in receipts from information
and communication related services
(services relating to computer
software, hardware, internet, e-commerce and
telecommunication sector) experienced over
the last decade was unprecedented.
• The ratio of invisible earnings to
merchandise increased from 40 % in 1990-91
to almost 75 % in recent years reflecting the
shifting comparative advantage of India in
favour of services.

41. 41
• With the shift in the competitiveness towards
services, in particular the technology related services,
India has emerged as one of the fastest growing
exporters of services in the world.
• Reflecting this, gross invisible receipts (comprising
services, transfers and income) increased from 29
%of total current receipts in 1990-91 to 44 % of total
current receipts in 2001-02.
• Net invisible surplus grew by 35.2 per cent to reach
US$ 31.7 billion in 2007-08 (April-September),
equivalent of 6.1 per cent of GDP.

42. 42
Capital Account
• The substantial increase in the foreign
investment, as a result of the liberalization
has been generating significant capital
account surplus.
• Capital account surplus increased from less
than $ 4 billion during the 1980s to US $ 8.6
billion during 1992-2002, resulting in a huge a
accumulation of foreign exchange reserves.
• As a proportion of GDP, capital flows
increased from 1.6 per cent during 1980s to
2.3 per cent during 1992-2002 and now it is
around 2%.

43. 43
• The trends in the capital flows over the
1990s reflects a shift in importance
from debt to non-debt flows with the
declining importance of external
assistance and external commercial
borrowings (ECBs) and the increased
share of foreign investment - both
direct and portfolio.
• FDI inflows (net) was $4.7 bn in 05-06
and of this 75.2% was in equity.

44. 44
• The increase in capital inflows coupled with
the improvement in the current account
position resulted in a surplus in the overall
BOP of India from 1993-94 onwards,
excepting 1995-96.
• The surplus amounted to $ 26.2 billion in
2004-05 as against a deficit of US $ 0.6
billion in 1992-93.
• As a result India is one of the largest
reserve-holding economies of the world.

45. 45
Causes of BOP problem in India
• 1. Large trade deficit
• 2. Fall in invisible surplus, caused by
a) increase in invisibles payments (debt service)
b) slackening of emigrants’ remittances and travel
income.
• 3. Sensitive behaviour of foreign creditors and
NRIs
• 4. Declining role of concessional external finance.

46. 46

47. 47
2009-2010
 BoP developments during 2009-10 indicate that despite
lower trade deficit, current account deficit widened on
account of slowdown in invisible receipts.
 There was also sharp increase in capital flows, which led
to accretion in foreign exchange reserves.
 The current account deficit of 2.8 % of the GDP in 2009-10
vis-a-vis 2.3 % in 2008-09, however remained well within
manageable limits.
 The net capital flows increased substantially to 3.8 % of GDP
in 2009-10 as compared to 0.5 % in 2008-09.
 This led to net accretion of US$ 13.4 billion in foreign
exchange reserves on BoP basis, as against the net outflow
of US$ 20.1 billion in 2008-09.

48. 48
2009-10
 Major determinants of BoP transactions
such as external demand, international oil
and commodity prices, pattern of capital
flows and the exchange rate changed
significantly during the course of the year.
 With the turnaround in exports and
revival in capital flows, external sector
concerns receded gradually in the second
half of 2009-10.

49. 49
First half (H1 – April-
September 2010) of 2010-11
• As per the latest data available, the
highlights of BoP developments during the
first half (H1 – April-September 2010) of
2010-11 were higher trade and current
account deficits as well as capital flows
visa-vis the first half of 2009-10.

50. 50
Balance of Payments : Summary ($ million)

51. 51
CURRENT ACCOUNT:
Merchandise trade
 India’s current account position during 2009-10
continued to reflect the impact of the global economic
downturn and deceleration in world trade.
 On a BoP basis, India’s merchandise exports of $
182.2 billion during 2009-10 posted a decline of 3.6
%, as against $ 189.0 billion in 2008-09, which
recorded a positive growth of 13.7 % over the exports
of $ 166.2 billion in 2007-08.
 Similarly, import payments of $ 300.6 billion also
recorded a decline of 2.6 % in 2009-10, as compared
to $ 308.5 billion in 2008-09, which was 19.8 % higher
than the imports of $ 257.6 billion in 2007-08.

52. 52
Merchandise trade
 Though the decline in exports was relatively
higher than that in imports, the merchandise
trade deficit in absolute terms decreased
marginally to $ 118.4 billion (8.6 % of GDP)
during 2009-10 from $ 119.5 billion (9.8 % of
GDP) in 2008-09.

53. 53
First half of 2010-11(April-September 2010)
• India’s exports and imports growth momentum,
which started during the second half of 2009-10,
continued during the first half of 2010-11 also.
• During H1 of 2010-11, exports recorded a growth
of 33.8 % as against negative growth of 25.7 %
during the corresponding period of the previous year.
• Similarly, Imports posted a growth of 28.2 %
during the first half of 2010-11, as compared to
negative growth of 21.1 % during H1 of 2009-10.
• Despite the higher export growth compared to
imports during April-September 2010-11, the trade
deficit widened in absolute terms by 19.7 % to $ 66.9
billion in the first half of 2010-11, as compared to $
55.9 billion during the same period last year.

54. 54
Invisibles
 The invisibles account of BoP reflects the
combined effect of transactions relating to
international trade in services, income associated
with non-resident assets and liabilities, labour,
property and cross-border transfers, mainly
workers’ remittances.
 Two components namely software services and
workers’ remittances, continued to remain
relatively resilient in 2009-10, as was the case in
2008-09, despite the global economic meltdown
and were mainly responsible for the net
invisible surplus.

55. 55
Invisibles receipts in 2009-10
• Invisibles receipts of $ 163.4 billion in 2009-10 recorded a
decline of 2.6 % over $ 167.8 billion in 2008-09 (as against an
increase of 12.7 % in 2008-09 over $ 148.9 billion in 2007-08),
mainly due to lower receipts under miscellaneous services
such as business, financial, and communication services,
together with lower investment income.
• Receipts under all the components of business services (such
as trade related services, business and management consultancy
services, architectural, engineering and other technical services,
and services relating to maintenance of offices abroad) showed
a decline during 2009-10 reflecting lagged impact of the global
crisis.
• Receipts under investment income declined to $ 12.1 billion
in 2009-10 from $ 13.5 billion in the previous year on account
of significant decline in interest rates abroad.

56. 56
Invisibles receipts
• Software receipts at $ 49.7 billion however,
showed an increase of 7.4 % in 2009-10 (14.9 %
a year earlier).
• Private transfer receipts, comprising mainly
remittances from Indians working overseas also
increased to $ 53.9 billion in 2009-10 (3.9 % of
GDP) from $ 46.9 billion (3.8 % of GDP) in the
previous year.
• Private transfer receipts constituted 15.6 % of
current receipts in 2009-10 (13.1% in 2008-09).

57. 57
Invisible payments in 2009-10
• Invisible payments increased by 9.4 % from $ 76.2 billion in
2008-09 to $ 83.4 billion in 2009-10 due to increase in payments
under all the components except software services, transfers and
investment income.
• As a result, the net invisible balance (receipts minus payments) of
$ 80.0 billion (5.8 % of GDP) in 2009-10 posted a negative
growth of 12.7 % over $ 91.6 billion (7.5 % of GDP) in 2008-09.
• The net receipts under the services component (travel,
transportation, insurance, G.N.I.E. miscellaneous) went down by
33.8 % from $ 53.9 billion in 2008-09 to $ 35.7 billion in 2009-10.
• However, software services registered a positive growth of 10.3
% during the same period from $ 43.7 billion to $ 48.2 billion.
• The other component of invisibles which posted a positive growth
was transfers (private as well as official).
• The net private transfers of US$ 52.1 billion in 2009-10 were
higher by16.8 % from $ 44.6 billion in 2008-09.

58. 58
Current account balance
• As a consequence of the decline in invisible
surplus, despite the lower trade deficit, the
current account deficit increased by 37.5 % in
2009-10 to $ 38.4 billion (2.8 % of GDP) from $
27.9 billion (2.3 % of GDP) in 2008-09.
• Similarly, the lower invisible surplus combined
with higher trade deficit during the first half of
2010-11 led to more than doubling of the
current account deficit to $ 27.9 billion from $
13.3 billion during April-September 2009-10

59. 59
CAPITAL ACCOUNT
• Stronger recovery in India, ahead of the global recovery
along with positive sentiments of global investors about
India’s growth prospects, encouraged a revival in capital
flows during 2009-10.
• The turnaround was mainly driven by large inflows under
FIIs and short-term trade credits.
• The gross capital inflows at $ 345.7 billion during 2009-
10 were 10.2 % higher than the $ 313.6 billion in 2008-
09, while gross capital outflows at $ 292.3 billion were
lower by 4.8 % from US$ 306.9 billion in 2008-09.
• As a result, net capital flows at $ 53.4 billion (3.8 % of
GDP) were much higher during 2009-10 as compared to
$ 6.8 billion (0.5 % of GDP) in 2008-09.

60. 60
FDI
• Both inward as well as outward FDI showed declining
trend in 2009-10 vis-a-vis 2008-09.
• The inward FDI declined by 12.4 per cent to $ 33.1
billion in 2009-10 from $ 37.8 billion in 2008-09.
• Similarly, outward FDI declined by 19.6 % from $ 17.9
billion in 2008-09 to $ 14.4 billion in 2009-10.
• Consequently, the net FDI (inward FDI minus outward
FDI) was marginally lower at $ 18.8 billion in 2009-10,
as compared with $ 19.8 billion in 2008-09.
• The FDI was channelled mainly into manufacturing
followed by construction, financial services and the real
estate sector.

61. 61
Portfolio investment
• Portfolio investment witnessed net inflow of $
32.4 billion in 2009-10 as against a net outflow of
$ 14.0 billion in 2008-09.
• The attractive domestic market conditions
facilitated net FII inflows of $ 29.0 billion in
2009-10 (as against net outflow of $ 15.0 billion in
2008-09).
• At $ 3.3 billion, the ADRs / GDRs remained at
the same level in 2009-10 as in 2008-09.
• Net ECBs slowed down to $ 2.8 billion ($ 7.9
billion in 2008-09) mainly due to increased
repayments.

62. 62
H1 of 2010-11
• Net capital inflows increased significantly
during H1 of 2010-11,
• mainly due to FII inflows, short term trade
credits and ECBs.

63. 63
Reserve Use
• In fiscal 2008-09, the widening of the
CAD coupled with net capital outflows
resulted in the drawdown of foreign
exchange reserves of US$ 20.1 billion
(excluding valuation) as against an
accretion of US$ 92.2 billion in 2007-08.

64. 64
50
BALANCE OF PAYMENTS SUMMARY 2008-09 ($ mn)
1. EXPORTS 1,89,001
2. IMPORTS 3,07,651
3. TRADE BALANCE 1,18,650
4. INVISIBLES (net) 89,923
receipts 1,63,534
payments 73,612
5. CURRENT ACCOUNT BALANCE -28,728
6. CAPITAL ACCOUNT TOTAL (net) 8,648
I. FOREIGN INVESTMENT (net) 3,467
a. inflow 164,915
b. outflow 161,448
II. EXTERNAL ASSISTANCE (net) 2,637
III COMMERCIAL BORROWING (net) 6,032
IV. Banking (net) -3,245
V. RUPEE DEBT SERVICE -100
VI.OTHER CAPITAL FLOWS (net) -1,545
VII. Errors & Omissions 1,402
7. Overall Balance (5+6) -20,080
8. RESERVE USE (- increase) 20,080

65. 65
BALANCE OF PAYMENTS SUMMARY 2009-10 (Rs.cr)
1. EXPORTS 8,62,333
2. IMPORTS 14,23,079
3. TRADE BALANCE -5,60,746
4. INVISIBLES (net) 3,80,120
receipts 7,74,512
payments 3,94,392
5. CURRENT ACCOUNT BALANCE -1,80,626
6. CAPITAL ACCOUNT TOTAL (net) 2,44,861
I. FOREIGN INVESTMENT (net) 15,541
a. inflow 9,43,447
b. outflow 6,99,806
II. EXTERNAL ASSISTANCE (net) 13,612
III COMMERCIAL BORROWING (net) 48,061
IV. Banking (net) 9,844
V. RUPEE DEBT SERVICE -452
VI.OTHER CAPITAL FLOWS (net) 62,574
VII. Errors & Omissions -7,271
7. Overall Balance (5+6) 64,235
8. RESERVE USE (- increase) -64,235

66. 66
BALANCE OF PAYMENTS SUMMARY 2009-10 ($mn.)
1. EXPORTS 1,82,235
2. IMPORTS 3,00,609
3. TRADE BALANCE -1,18,374
4. INVISIBLES (net) 79,991
receipts 1,63,404
payments 83,413
5. CURRENT ACCOUNT BALANCE -38,383
6. CAPITAL ACCOUNT TOTAL (net) 51,824
I. FOREIGN INVESTMENT (net) 51,167
a. inflow 1,98,669
b. outflow 1,47,502
II. EXTERNAL ASSISTANCE (net) 2,893
III COMMERCIAL BORROWING (net) 10,366
IV. Banking (net) 2,084
V. RUPEE DEBT SERVICE -97
VI. OTHER CAPITAL FLOWS (net) -13,016
VII. Errors & Omissions -1,573
7. Overall Balance (5+6) 13,441
8. RESERVE USE (- increase) -13,441

67. 67
SELECTED INDICATORS OF THE EXTERNAL
SECTOR

68. 68
Foreign Exchange Reserves of selected countries

69. 69
Current account deficits (2009)
Country As % of GDP
1 Brazil -1.5
2 China 5.9
3 Germany 5.0
4 UK -1.2
5 USA -2.7
6 Japan 2.8
7 INDIA -2.1

70. 70
Size of External Sector (2009)
As % of GDPCountry
Exports Imports
1 Brazil 9.7 8.5
2 China 23.8 19.9
3 Germany 33.7 28.1
4 UK 16.3 22.3
5 USA 7.5 11.4
6 Japan 11.4 10.8
7 INDIA 12.8 19.8
Indian economy is less vulnerable to global crises as its
external sector is small relative to its GDP