Some observations on India's balance of payments: Acommentary

This note explores various intricacies that can be unearthed while analyzing the data and some estimates related to BOP in India. The idea of this exploration is to examine various issues that could be interlinked to the various components of BOP itself and, give some reflections on policies and economic scenario under which BOP has evolved. A prominently increasing upward trend is observed in both exports and imports. The mean values of GDP percentages for exports have risen from 8.21 percent, to 12.16 percent and thereafter to 15.10 percent across all three sub-periods. Similarly, imports as a percentage of GDP have multiplied from 11.04 percent, to 17.17 percent and to 23.09 percent throughout all the three sub-periods. Mean values for the entire sample period for both exports as a percentage of GDP as well as imports as a percentage of GDP worked out to be 11.7 and 16.8 percents respectively. Invisibles have played a predominant role in controlling and moderating the disadvantages inflicted by trade account. The unstable growth rate in both trade account and current account is detrimental to the long run adjustment that can be aimed at sustainable external balance while keeping considerable and steady target of economic growth. If Government is serious in policy-making, long term perspectives on various policies have to be properly modelled to give synchronized results for harmonious growth of both internal and external sectors, particularly keeping in mind export growth, creating investment climate, strengthening business confidence, while making agriculture and industry as strong sectors for boosting growth.