Study the following balance of payments data of a country:
| Item | Million USD |
|---|---|
| Exports of goods | 200 |
| Imports of goods | 290 |
| Net invisibles | 60 |
| Capital account balance | 35 |
| Errors and omissions | −5 |
Which of the following is correct?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → There is a trade deficit and a current account deficit, but the BoP is in balance.
Given:
Exports of goods = 200
Imports of goods = 290
Net invisibles = 60
Capital account balance = 35
Errors and omissions = −5
Work down the BoP step by step.
Trade balance = 200 − 290 = −90 (trade deficit)
Current account balance = −90 + 60 = −30 (current account deficit)
BoP balance = −30 + 35 + (−5) = 0
A balance of zero means the BoP is in balance, so reserves do not change.
Option (3) — the current account deficit is only 30, not 150.
NCERT (2026-27): “Errors and Omissions … Table 6.1 provides a sample of Balance of Payments for India. Note in this table, there is a trade deficit and current account deficit but a capital account surplus. As a result, BOP is in balance.”
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