Balance of Payments

The balance of payments, also known as balance of international payments, of a country is the record of all economic transactions between the residents of the country and the rest of the world in a particular period. It is composed of two main components.
1. Current Account
2. Capital Account
The balance of payments includes all external visible and non-visible transactions of a country.
If a country has a deficit on the current account, it needs a surplus on the capital account.

Balance of Payments 2015-16
The CAD (Current Account Deficit) narrowed to 1.1 per cent of GDP in 2015-16 from 1.3 per cent in 2014-15, on the back of contraction in the trade deficit.
India’s trade deficit narrowed to US$ 130.1 billion in 2015-16 from US$ 144.9 billion in 2014-15.
Net invisible receipts declined in 2015-16, primarily reflecting moderation in both net services earnings and private transfer receipts.
Net FDI inflows during 2015-16 (US$ 36.0 billion) rose sharply by 15.3 per cent over the level in 2014-15.
Portfolio investment, however, recorded a net outflow US$ 4.5 billion in 2015-16 as against a net inflow of US$ 40.9 billion last year.
In 2015-16, there was an accretion of US$ -17.9 billion to foreign exchange reserves (on a BoP basis) as compared with US$ -61.4 billion in 2014-15.
Indian Economy