l3 p1 bop international trade.1.1
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Balance of Payment
#1: NCERT
Long term loan from RBIOnly for Sch. Commercial banks can borrow from RBI @this Interest rate. Can even use SLR securitiesWhat RBI pays to its clients for short term loansAll clients can borrow short term loans from RBI @this interest rate. cant use SLR securities though!Banks have to keep this much in cash, gold, G-sec & other RBI approved securitiesHave to set aside this much cash in reserve =no income
NDTLQuant. ToolInflation fightTight/DearDeflation fightEasy/CheapCRR, SLRIncreaseDecreaseOMOSellBuyPolicyRATEIncreaseDecreaseMonetary PolicyQualitative /selective/ direct Tools
Evolution & financial inclusion
Rs.10 lakh1 lakh4 lakh5 lakh20%80%Equity: ShareholdersProprietorsCreditors
T-BillG-SecShort termLong term
SharesADRDividend$$NASDAQETF: Exchange Traded Fund
Portfolio Goldman SachRs.10Rs.10Rs.10
ONGC, CIL, GAIL10 CPSERs.3000 croreNFORs.20
BSE-NSENAV fluctuates daily10
P-NoteDerives value from FIIs portfolio
Sadhu Yadav a.k.a Politician, builder, Contractor & Mafia all in one Multiskill
Hawala operator sends Rupees to Tax Haven, convertingto DollarsHedge Fund Manager or Investment banker in Tax Haven
SEBI registered FII
FIIs portfolio
12SENSEX calculation: 1979
30k with Mallya70k with public
13Demat SystemYour DEMAT accountYour Paper SharesFinancial inclusion#PAN#DEMATSecurities depository ltd.13
SaharaNSEL
SaradhaFinancial Scams in Recent yearsModus Operandi Ph.D Only Basic ideaHow to prevent- FSLRC.Important
#1: NCERTMajor topicsCoveredNew topicBalance of PaymentInternational TradeDefinitionComponents
Sami song18Maintained by Central bank of each countryAs per IMF manual BMP6All amounts Expressed in Dollar$$Credit: Incoming money (+)Debit: Outgoing money (-)Sample Click meSystem RecordBoP
Debit: outgoingCredit: incoming19
Sami song20
Anil to Adnan?No because both residents.Economic Transactions
Tom Cruise to Adnan Sami?Yesbecause resident vs non-residentUS Fed Reserve: outgoing (-)Indian RBI: incoming (+)Economic Transactions
Adnan to Parents in Pakistan?YesIndian RBI: outgoing (-)Pak Central Bank: incoming (+)Canadian Centre Bank. (NA)
Economic Transactions
Worlds Balance of Payment=ZERO
Sami song25Balance of PaymentInternational TradeDefinitionComponents
Component+ Credit (Incoming)Debit (Outgoing)NetVisible=>Goods(Export) 3 lakh(Import) - 5 lakhMINUS 2 lakh BoP: Current Account (2013-14) Million USDBalance of Trade =Net difference between Imports & ExportsTrade Deficit = When BoT is negative. (IM > EX)Trade Surplus = BoT Positive (EX > IM)
Main ImportsMain Exports
TRADEDeficit
For Ranking refer to Ch.6 of Economic SurveyBalance of Trade
Deficitsurplus
Current AccountProfit, interest dividend (-)Foreign investor: debt / EquityBoard of Directors, ChairmanCEO/MD, Executives, Staff
Capital Account (+)Kishor Biyani, Future group, Pantaloon36Shares sold money taken outCapital (-)Foreign investor: debt / EquityBoard of Directors, ChairmanCEO/MD, Executives, Staff
Capital Account (+)Kishor Biyani, Future group, Pantaloon37Bond/DebenturePrincipal repaidCapital (-)Foreign investor: debt / EquityBoard of Directors, ChairmanCEO/MD, Executives, Staff
Capital Account (+)Kishor Biyani, Future group, Pantaloon38
DeficitsurplusProfit-interest-DividendsDeficit
Current Account BalanceDEFICITSURPLUSDEFICITSURPLUSRemittances 2013 (World Bank) BillionIndia70China60Philippines25Mexico22Nigeria21
Visible: -147 billionInvisible: +115 billionBalance: (-) 32 billionHence Current Account DeficitVisible vs InvisibleCAD
Indias CAD: Past Present FutureHow to reduce CAD?
Crude oil consumption reduce? Not possible beyond a point.Gold ban? Smuggling; reduce inflation; +ve Real interest rateIT boost? Alone insufficientAgro + Mfg. + service: boostFDI promote? Capital PLUS but Current MINUS
Current Account Deficit
Capital AccountCapital AccountDifference between FDI and FPI (FII)
By finance ministryto bring clarity on definition of FDI and FIIRecommendations accepted in June 2014Arvind Mayaram PanelFDI-FII48Types of companies: Mayaram FII10% or more FDI