Aartee Mishra is teaching live on Unacademy Plus
aily Lectuire Series Ramesh Singh' V brief summary o unacadeny 1 Indian Economy y Aartee Mishra External Sector inIndia Hindi
lam Aartee Mishra Graduated from Delhi University, Topper in all my semesters, Pursuing P.G and preparing for CSE. 2 Years of teaching experience of General Studies for competitive examination Have been teaching on Unacademy Plus
Ancient & Medieval History From Harappa to Revolt of 1857 with brief Art and Culture (Prelims & Mains) ^ unacademi Aartee Mishra Detailed Coverage of each and every topic from Ancient to Medieval India Short Crisp Notes for better Revision Test Series Course Starting from, 30th July 9:30pm-10:30pm on Unacademy Plus
BALANCE OF PAYMENT (BOP) The outcome of the total transactions of an economy with the outside world in one year is known as the balance of payment (BoP) of the economy Basically, it is the net outcome of the current and capital accounts of an economy. It might be favourable or unfavourable for the economy. However, negativity of the BoP does not mean it is unfavourable. A negative BoP is unfavourable for an economy if only the economy lacks the means to fill the gap of negativity The BoP of an economy is calculated on the principles of accountancy (double-entry book-keeping)15 and looks like the balance sheet of a company-every entry shown either as credit (inflow) or debit (outflow). If there is a positive outcome at the end of the year, the money is automatically transferred to the foreign exchange reserves of the economy. And if there is any negative outcome, the same foreign exchange is drawn from the country's forex reserves. If the forex reserves are not capable of fulfilling the negativity created by the BoP, it is known as a BoP crisis and the economy tries different means to solve the crisis in which going for forex help from the IMF is the last resort.
CONVERTIBILITY An economy might allow its currency full or partial convertblity in the current and the capital accounts. If domestic currency is allowed to case of full current account convertibility. Similarly, in cases of capital outflow, if the domestic currency is allowed to convert into foreign currency, it is a case of full capital account convertibility. .If the situation is of partial convertibility, then the portion allowed by the government can be converted into foreign currency for current and capital purposes. It should always be kept in mind that the issue of currency convertibility is concerned with foreign currency outflow only
Convertibility in India: India's foreign exchange earning capacity was always poor and hence it had all possible provisions to check the foreign exchange outflow, be it for current purposes or capital purposes (remember the draconian FERA). But the process of economic reforms has changed the situation to unidentifiable levels. Current Account: Current account is today fully convertible (operationalised on 19 August, 1994). It means that the full amount of the foreign exchange required by someone for current purposes will be made available to him at official exchange rate and there could be an unprohibited outflow of foreign exchange (earlier it was partially convertible) India was obliged to do so as per Article VIlI of the IMF which prohibits any exchange restrictions on current international transactions (keep in mind that India was under preconditions of the IMF since 1991)
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