Question

What are visible transactions? Give examples.

Answer 1

• Visible transactions refer to the international exchange of physical goods or merchandise between countries. These transactions involve the import and export of tangible items that can be seen, touched, and counted when they cross the borders.
• For example, if an Indian exporter sells goods like cars, aluminium, or tea to a foreign buyer, the transaction is recorded as a credit item in the Indian balance of payments because it brings foreign exchange into the country. On the other hand, when India imports goods like oil, machinery, or electronics, it is recorded as a debit item, as it results in an outflow of foreign exchange.
•  Thus, visible transactions include all trade in physical goods, such as iron ore, spices, textiles, and vehicles, which are part of a country’s visible trade. These transactions are important components of the balance of trade in the balance of payments account.