STUDY OF BALANCE OF PAYMENT IN INDIAN PERSPECTIVE

Decline in gold imports and turnaround in exports helped narrow India's current account gap sharply to $5.2 billion, or 1.2 percent of GDP, in the July-September quarter of this fiscal 2013-14. The paper intended to analyze the theoretical background that why India is facing current account deficit and the role of devaluation in the balance of payment position of India. It suggests that certain external and internal factors are more important than the devaluation of exchange rate. It highlights the role of capital flight in the figuring out balance of payment. Further. This paper also has policy implications suggesting the importance of improving technological merchandise and quality of product... Whether BOP A/C will be in surplus will depend upon external as well as internal factor. Presently it will depend on the length of the global financial crisis and the strength of the policy response. Interestingly, the reduction in current account deficit in the present year also validates the theoretical background given by this paper.