Business Studies, asked by patejas4watha, 1 year ago

An adverse balance of payments is always a sign of weakness in the economy

Answers

Answered by rahulragini
26
Balance of payment is the difference between the money spent on imports and that earned from exports. 
After independence, India's imports consisted of food grains, fertilisers, petroleum, raw materials and finished goods. Gradually, during the green revolution and subsequently, i.e. during the decade of the seventies and after, a tapering of food imports was noticed and, today, we exist in a state of food sufficiency. Similarly, the policy makers in Government of India have encouraged import substitution and export promotion. So, we are in a favourable balance of payment position with most countries in the world, that is to say the ones we trade with.
In view of the foregoing and with general economic understanding, it is true that economies that have adverse balance of payments with most of their trading partners would show signs of being weak economies, but the difference in value of their total imports and that of their total exports would be a true reflection of their actual economic health.  
Answered by sawakkincsem
7
An economy is made up of so many factors local as well as external factors. It is the leaders of the country which decide what sort of policies will be applied and what factors will be applied in order to have a better economy. If they want their economy to flourish they limit the imports of the items in the country and when they need to import something in which they are lacking they import it, for example, Japan is a country which lacks energy sources. So it depends on the resources available in the economy if they are not available they import it and it is not always a sign of weakness.
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