BOP : Balance Of Payment

An accounting record of all monetary transactions between a country and the rest of the world. It includes  payments for the country's exports and imports of goods, services financial, capital and financial transfers. It is also known as balance of international payments encompasses all transactions between a country’s residents and its nonresidents involving good, services and income financial claims on and liabilities to the rest of the world and transfers such as gifts.

Types

1.current account: shows the net amount a country is earning if it is in surplus, or spending if it is in deficit. It is the sum of the balance of trade (net earnings on exports minus payments for imports), factor income (earnings on foreign investments minus payments made to foreign investors) and cash transfers.

2.Capital Account records the net change in ownership of foreign assets. It includes the reserve account (the foreign exchange market operations of a nation's central bank), along with loans and investments between the country and the rest of world (but not the future regular repayments/dividends that the loans and investments yield; those are earnings and will be recorded in the current account).

BOP identity assumes that any current account surplus will be balanced by a capital account deficit of equal size – or alternatively a current account deficit will be balanced by a corresponding capital account surplus.

“Balance of payments surplus" (or deficit  a deficit is simply a negative surplus) refers to the sum of the surpluses in the current account and the narrowly defined capital account (excluding changes in central bank reserves). Denoting the balance of payments surplus as BOP surplus

BOP surplus = Current Account Surplus + Narrow Capital Account Surplus

IMF Definition : Current a/c +Financial a/c +Capital a/c +Balancing Item = 0

While the overall BOP accounts will always balance when all types of payments are included, imbalances are possible on individual elements of the BOP such as the current account the capital account excluding the central bank's reserve account or the sum of the two. Imbalances in the latter sum can result in surplus countries accumulating wealth, while deficit nations become increasingly indebted.

The term "balance of payments" often refers to this sum: a country's balance of payments is said to be in surplus.

Highlights : 12th Five Year Plan

Estimated growth rate at 8.2% but the National Development Council (NDC) on 27 Dec 2012 approved 8% growth rate for 12th five-year plan.

Increasing green cover by one million hectare every year and adding 30,000 MW of renewable energy generation capacity in the Plan period.

To reduce emission intensity of the GDP in line with the target of 20-25 reduction by 2020 over 2005 levels.

Raising agriculture output to 4 per cent for the full Plan.

Manufacturing sector growth to 10 per cent for the full Plan.

Target of adding over 88,000 MW of power generation capacity in the 12th five year plan.

The plan aims towards achieving a growth of 4 percent in agriculture and to reduce poverty by 10 percentage points, by 2017.

Kisan Credit Card

Credit card to provide affordable credit for farmers in India. It was started by the Government of India, Reserve Bank of India, and National Bank for Agricultural and Rural Development (NABARD) in 1998-99 to help farmers to access timely and adequate credit.

The Kisan Credit Card allows farmers to have cash credit facilities without going through time-consuming bank credit screening processes repeatedly.

Repayment can be rescheduled if there is a bad crop season, and extensions are offered for up to four years.

The card is valid for three years and subject to annual renewals.

Eligible farmers to be provided with a Kisan Credit Card and a pass book or card-cum-pass book.

Revolving cash credit facility involving any number of drawals and repayments within the limit.

Limit to be fixed on the basis of operational land holding, cropping pattern and scale of finance.

Entire production credit needs for full year plus ancillary activities related to crop production to be considered while fixing limit.

Sub-limits to cover short term, medium term as well as term credit are fixed at the discretion of banks.

Card valid for 3 to 5 years subject to annual review. As incentive for good performance, credit limits could be enhanced to take care of increase in costs, change in cropping pattern, etc.

Each drawal to be repaid within a maximum period of 12 months.

Conversion/reschedulement of loans also permissible in case of damage to crops due to natural calamities.

Security, margin, rate of interest, etc. as per RBI norms.

Operations may be through issuing branch (and also PACS in the case of Cooperative Banks) through other designated branches at the discretion of bank.

Withdrawals through slips/cheques accompanied by card and passbook.

Crop loans disbursed under KCC Scheme for notified crops are covered under Rashtriya Krishi Bima Yojna (National Crop Insurance Scheme), a crop insurance scheme introduced at the behest of Government of India to protect the interest of the farmer against loss of crop yield caused by natural calamities, pest attacks etc

The card is valid for three years, of which crop loan and working capital components have to be renewed annually.

Maximum limits: Rs. 50000/- for Rabi Crops. Rs. 50000/- for Kharif Crops.

Eligibility: Individual/society.

Repayment period: Kharif 31 January Rabi 31 July. 5

Collateral Security Charge on land in case loan is above Rs. 10000/- and two sureties if loan is below Rs. 10000/-.

Structure of Indian Monetary Channels