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Question
Distinguish between balance of trade, balance of current account and balance of capital account.
Distinguish Between
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Solution
| Basis | Balance of Trade (BoT) | Balance of Current Account | Balance of Capital Account |
| Meaning | Difference between the value of exports and imports of goods only. | Records all current economic transactions, including goods, services, income, and transfers. | Records capital transfers, investments, and borrowings. |
| Scope | Narrow scope (only visible trade). | Broader scope (includes visible, invisible, and unilateral transfers). | Deals with financial assets and liabilities. |
| Includes | Only exports and imports of goods. | Goods, services, income, and unilateral transfers. | FDI, FPI, loans, and changes in forex reserves. |
| Nature | Part of the current account. | Main component of BoP related to income and spending. | Deals with inflows and outflows of capital or assets. |
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