Macro-Economic Determinants of Balance of Payment in India

This study investigates the impact of balance of payment on certain macro-economic variables like GDP, inflation, net exports, exchange rate etc in India between 1981 and 2013, using correlation and regression. It was found that all the variables except balance of payment, exhibited non-stationary. The results also indicate that balance of payment fluctuations in India could be caused by the balance of trade, exchange rate movement, inflation, industrial production and Gross Domestic Product (GDP). We concluded that balance of payment is significantly affected by all the above mentioned parameters but for exchange rate for which the impact turned out to be statistically insignificant