Analysis of BOP of India for five years:

Analysis of BOP of India for five years:

Indian economy is 9th largest economy in the world with GDP growth rate of 8.5%.  It involves trade with many countries like USA, China , UAE and other countries. It exports goods like precious stones, machinery, iron and steel, chemicals, vehicles, apparels etc. and it imports goods like crude oil, precious stones, machinery, fertilizer, iron and steel, chemicals etc.

Indian Bop is having mainly two accounts current account and capital account. Current account includes trading of goods and services and capital account includes capital inflows and outflows.

Analysis of important components of BOP of India:

Total current assets in crores:

2006-07	2007-08	2008-09	2009-10	2010-11
-44383	-63479	-127631	-180626	-202532

Total current account of India is keep on decreasing that is it is in deficit.  It shows that imports are more than exports for last five years in India. If we see the total current account of 2006 and 07 the deficit was Rs.(-)44383 crores and it went on increasing for next five years at present current account deficit is Rs. (-)202532 crores.  But if we compare the percentage increase of deficit for last five years, this year the volume of deficit is less. In 2007 the deficit increased to 43% in 2008 it was increase enormously as there was recession in the whole world ie, 101 % increase of deficit which was a worrying situation for the country but it recovered in next year ie, there was increase only of 41%. Current year showed positive signal as the current account deficit has increased only 12 %. This is mainly because there is good improvement shown in export service that is around 27% of increase from last year and increase in travel is about 55%,  and transportation is more than 150% .

Foreign investment

Item/Year	2006-07			2007-08
	Credit	Debit	Net	Credit	Debit	Net
Foreign investment	600951	534160	66791	1086530	912135	174395

2008-09			2009-10			2010-11
Credit	Debit	Net	Credit	Debit	Net	Credit	Debit	Net
755703	733018	22685	943447	699806	243641	1304426	1132272	172154

                   

Analysis

¨  This 5 years data shows huge fluctuations, net investments have increased in 2007-2008. But in 2008-2009 it has gone down which means there is no much difference between debit and credit

¨  Current year net investment has gone down which is good sign

¨  2007-2008, 2009-2010 and 2010-2011 has increased investments

¨  Foreign direct investment is low than portfolio investment

¨  Huge deficit found in equity, reinvested earnings and other capital

Loans from 2005-06 to2010-11

 India net loans in the year 2005-06 is less comparing with 2006-07 the government too much loans, again in the year 2007-08 it is increased but in the year 2008-09 it is reduced drastically, again in the  year 2009-10 it is increased  and in the year 2010-11 it is increased in the same path.

Credits:-

From the figure we conclude that the india borrowing money continuously increasing from year to year. in the year 2005-06 it is 174729 again in the year 2006-07 it is 246525 and in the year 2007-08 it is 330331 and again in the year 2008-09 it is 285412 slightly lesser than the previous year, again in the year 2009-10 it is 349720 higher than the previous year, again in the year 2010-11 it reached the maximum that is 486050.

Debits:-

From the figure we conclude that the debits are always lesser than the credits so it need the government to barrow the money and also the trend is increasing in nature. In the year 2005-06 it is 140332, again in the year 2006-07 it is 136091 slightly lesser than the previous year, again in the year 2007-08 it is 166840 and in the year 2008-09 it is 250612 higher than the previous year, again in the year 2009-10 it is 288047, and in the year 2010-11 it reached the maximum point that is 359057.

Banking Capital

Year	Value (Net) in crores
2006	8477
2007	47155
2008	-19205
2009	9844
2010	22025

Banking Capital includes the following:

a)      Commercial Banks:

     Assets

     Liabilities

     Non-Resident Deposits

b)      Others

Analysis:

1)       In the year of 2006 the banking Capita is 8477 crs, But it is drastically increased in the year of 2007. The reason behind this is the total Bank Assets is 27632 crs in 2007 But, in the year of 2006 the Bank assets value is in Negative that is -15754 crs. Because of this reason only Banking Capital is increased. The total banking Assets value in the year of 2007 is 45155 crs.

2)      Comparing with 2007 the total banking asset is decreased in the the year of 2008 by -19205 crs. Because of this reason the total banking assets value also decreased.

3)      In the year of 2009 the total Banking asset value is again raised by 9844 crs. In this year the total increase is 29049crs.

4)      In the year of 2010 the total Banking assets value is increased by 22025 crs com[paring with the previous year.

Reforms and recent developments in Indian Secondary market:

Reforms and recent developments in Indian Secondary market:

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

History:

The origin of the stock exchanges in India can be traced back to the later half of 19^th century. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE SENSEX in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading SENSEX futures contracts. The National Stock Exchange of India was promoted by leading financial institutions under Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, it was recognized as a stock exchange under the Securities Contracts Act, 1956. NSE commenced operations in the Wholesale Debt Market segment in June 1994. The Capital market segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. At present India have 23 stock exchanges.

Reforms and developments:

·        Till recent past floor trading took place in all the stock exchanges in India. In this system the trade takes place through open outcry system during the official trading hours. Trading posts are assigned for different securities where buy and sell activities of securities took place.

·        In 1994 NSE and OTCEI was set up with the screen based trading facility. After one year BSE introduced the screen based trading system. And after that more and more stock exchanges adopted screen based trading system.

·        In 1992 foreign institutions investors have been allowed to invest in India.

·        In 1993 private sector mutual funds have been allowed.

·        In 2001 Derivatives in the form of futures and options are introduced for trading and hedging purpose.

·        SEBI has made compulsory to all the intermediaries to register with it.

·        At present trader can trade through laptops, palmtops and mobile phones also.

·        The trading cycle has been shortened to T+2 from T+5 so that investor should not wait for sale proceeds of his investments.

·        At present almost 99% of the scrips are dematerliased. Almost all the traders are in the demat form.

·        Now balance sheet and prospectus of the company are available to the investors.

·        At present NAV has to be published.

·        Insider trading and unfair practices are strictly prohibited.

Conclusion:

SEBI has got still many future plans for secondary market in pipeline. The Central Registry of market intermediaries and professionals with unique identification number is under construction. And T+1 settlement is also in line. Structural consolidation, infrastructural improvements, product-innovation, refinement of regulations, and integrated surveillance are some of the future plans.