|
The Reserve Bank of India, today released the report of the Working Group on India’s balance of payments statistics and the revised BoP manual for India (rbi.org.in/scripts/PublicationReportDetails.aspx?UrlPage=&ID=596) .
The Report has two parts. Part I discusses various issues relating to India’s Balance of Payments statistics and makes a number of suggestions to improve compilation, coverage and presentation of India’s balance of payments consistent with international best practices. Part II presents the revised Balance of Payments Manual for India.
Key Recommendations
Goods
-
Buying and selling of goods that do not cross national boundaries and do not undergo significant transformation have to be recorded as goods under “merchanting”. Repairs on goods, which have hitherto been recorded under goods, need to be included in services and renamed as “maintenance and repair services not included elsewhere.”
-
A new purpose code for manufacturing services on physical inputs owned by others may be introduced to give a separate treatment to "goods for processing".
-
The data on imports should be presented on free on board (FOB) basis. Necessary information may be gathered from the Daily Trade Returns (DTRs) or through a survey.
-
Re-exports may be presented as a supplementary item under exports and therefore, an additional code for re-export may be introduced at the Customs’ end.
-
In view of the persistence of differences in the import figures between the Reserve Bank and Directorate General of Commercial Intelligence and Statistics (DGCI&S), a reconciliation exercise, on a quarterly basis, between the Reserve Bank and the DGCI&S be initiated.
Services
-
Transportation services should be classified by route (sea, air and others) and by component (passenger, freight and others).
-
Regarding disaggregated information on health and education related services, new purpose codes should be introduced under Foreign Exchange Transactions Electronic Reporting System (FETERS) and the Department of Commerce, Government of India should also follow up with the respective ministries to collect the relevant information.
-
A switch over to banking channel data reported through FETERS be adopted to compile details on software services and use the industry sources (i.e., NASSCOM data) for validation purposes only.
-
New purpose codes to be introduced to capture various services viz., receipts for the cost of construction of projects executed by Indian companies abroad, pension and standardised guarantee services, “manufacturing services on physical inputs owned by others” and “maintenance and repair services n.i.e” as well as “merchanting services”.
-
To capture details on financial services related to derivatives in India’s BoP, a separate committee needs to be set up.
-
Invisibles article containing disaggregated information on services be published on a quarterly basis and possibility of releasing monthly aggregate data on trade in services be explored.
-
A standing committee with officers from relevant departments of the Reserve Bank, Department of Commerce, DGCI&S, NASSCOM, Software Technology Parks of India (STPI) and other relevant ministries/departments, be constituted to look into various medium and long-term issues relating to collection of data on trade in services and to examine data requirements for bilateral and multilateral trade negotiations. The committee may also explore the possibility of capturing details of “Foreign Affiliates Statistics” (FATS) and Mode 3 transactions (commercial presence which represent domestic operations of foreign affiliates including the subsidiaries of subsidiaries).
Income and Transfers
- Income and transfers be appropriately classified under the heads of primary income and secondary income as per the international best practices.
Capital Account
-
Capital account in India’s current standard presentation of BoP should be bifurcated and presented separately as “capital account” and “financial account”. Accordingly, “capital transfers” and “non-produced and non-financial assets”, are to be excluded from the current account of India’s balance of payments, and included explicitly in the rechristened “capital account”.
-
An internal Group be set up to address the issue of definition and coverage of foreign direct investment.
Scheme of Implementation
-
The BoP data should be presented in the new format and work to be initiated immediately to gather additional information as recommended in the Report.
-
The IMF expects its member countries to implement the BPM6 standards by 2012. The Group is hopeful of meeting the time line.
BoP Manual
The Manual, presented in Part II of the Report discusses the conceptual and methodological issues pertaining to BoP. It has also made a detailed assessment of the current practices of compilation, data sources and presentation of BoP in India against the backdrop of the significant changes introduced by the IMF’s latest Manual (BPM6). The Manual incorporates a revised format for standard presentation of BoP in India, in conformity with international best practices.
Background
The Reserve Bank of India (RBI) has been compiling and publishing Balance of Payments (BoP) data for India since 1948. It brought out India’s Balance of Payments Compilation Manual was brought out for the first time in 1987 to put together methodological changes and provide information on concepts, constituents and sources of data used.. The manual was in line with the Fourth Edition of the Balance of Payments Manual (BPM4, 1977) of the International Monetary Fund (IMF). Subsequently, the IMF released the Fifth Edition of the Balance of Payments Manual (BPM5, 1993), which sets out detailed revised accounting procedure to synchronise external accounts with the System of National Accounts. Several changes and improvements in the compilation and presentations of India’s BoP have also been introduced over the years. However, there was no explicit and comprehensive record of these available in one place. In the meantime, IMF published the Sixth Edition of the Balance of Payments Manual (BPM6, 2009) to take into account, among other things, the developments in globalisation impacting cross-border transactions and issued guidelines to capture them appropriately in BoP statistics.
Against this backdrop, the Reserve Bank constituted a Working Group (Chairman: Shri Deepak Mohanty) to examine the current practices, procedures of compilation, presentation, coverage and sources of India’s Balance of Payments (BoP) statistics in relation to international best practices and to bring out a comprehensive Balance of Payments Manual for India. The Group submitted its Report to Deputy Governor, Dr. Subir Gokarn on October 13, 2010.
Ajit Prasad
Assistant General Manager
Press Release : 2010-2011/721
|
