Changes in India's Balance of Payments

Balance of payment is an Economic Barometer of nations. It gives the picture of soundness of economy. The countries where there is no problem in balance of payments, got integrated with the other countries in an easy manner. Balance of Payments position is an index of country¿s economic strength or weakness. Government takes several measures to correct the unfavourable balance of payment situation because such situation cannot last long. The corrective measures may be selective i.e., they are taken with reference to certain commodities or countries. The measures include quota and license, exchange control and tariffs however their utility is minimized in the changed economic environment under WTO. Sometimes when these elective (or quantitative) measures fail and the adverse situation persists, the country has to resort to a painful action, i.e., devaluation of currency.