Impact of balance of payment in Indian economy

Pages: 357-359
Jasbir Kaur (Govt. National College, Sirsa, Haryana )

The result of balance of payments produce similar results as in the case of TB for variables such as RRMS and exchange rates.In contrast to the results of RRI incase of bilateral trade balance, the BOP results show that it is significant only for 5 countries.It suggests that income level of India and its trading pattern is not considered as an important factor influencing India`s BOP,since BOPis basically a monetary phenomenon being influenced much by monetary flow between the countries.It could be substantiated from the results of RRMS variable,that it is significant in case of 8 out of10 countries.It implies that during the last few decades BOP is basicaly regulated with flow of international reserve money.Further BOP results illustrate that both nominal and real exchange rate are significant determinants of BOP. It implies that the devaluation of nominal and real exchange rate improves India,s balance of payments in the long run.