Balance of Payments: UPSC Mind Map

Interactive mind map for BALANCE OF PAYMENTS, covering key concepts, relationships, and facts relevant to UPSC Prelims and Mains preparation.

Key Concepts in this Mind Map

Balance of Payments (BoP)
Definition
* Systematic record of all economic transactions
* Between residents of a country and the rest of the world
* Over a specific period (e.g., a financial year)
* Always balances *ex-post* (credits equal debits)
Components
Current Account
* Records transactions of goods, services, income, and unilateral transfers
* Does not create future claims/liabilities
* Visible Trade (Merchandise)
* Exports (-) and Imports (+) of Goods
* Invisible Trade (Services)
* Exports (-) and Imports (+) of Services (e.g., tourism, software, shipping)
* Investment Income
* Interest, dividends, profits (received - and paid +)
* Unilateral Transfers
* Remittances, gifts, grants (received - and paid +)
Capital Account
* Records transactions creating assets or liabilities
* Represents financial flows (debt, equity)
* Foreign Investment
* Foreign Direct Investment (FDI): Long-term, controlling stake
* Foreign Portfolio Investment (FPI): Short-term, financial assets (stocks, bonds)