International Business, 2nd Edition

11

INTERNATIONAL BALANCE OF PAYMENTS

LEARNING OBJECTIVES

After reading this chapter, you should be able to:

• Discuss the fundamentals of the balance of payments of a country
• Understand the different components of the balance-of-payments account
• Explain the concept of equilibrium and disequilibrium in a country’s balance-of-payments account
• Understand the significance of the official reserves account in balance of payments accounting
• Be conversant with trends in India’s balance-of-payments account over the years

INDIA’S BALANCE OF PAYMENTS CRISIS

The Indian economy faced a balance of payments crisis in July 2013 as its foreign exchange reserves touched a low of USD 280 billion—enough to cover only seven months of imports. India has traditionally ...