Current Account Surplus
A current account is a balance of payments account that documents the flow of funds as a result
of imports and exports of goods and services of a country. This account either has a positive
balance (surplus) or a negative balance (deficit). A current account surplus means that the current
account has a positive balance of payments. In other words, the exports of a country exceed the
imports.
Candidates preparing for the upcoming IAS exam must learn about Current Account Deficit at
the linked article.
In this article, we shall discuss at length what is current account surplus, what is its significance
and more. All government exam aspirants must review the information discussed further below
in the article.
Balance of Fiscal Deficit
Payments
Fiscal Policy of Tax Policy Council & Tax
India Policy Research Unit
What is Current Account Surplus?
Every country needs to record their inflows and outflows occurring due to trade in a particular
period. The current account is a statement that records the income and expenditure of a country
with other countries. It comprises the value of exports and imports of goods and services,
interest, dividends and profits, unilateral receipts/or payments from/to the rest of the world. But
what is the current account surplus?
When the country’s outflow is more than the inflow, meaning that the rest of the world owes
more to it than what is owed by said country, it is said to have a Current Account Surplus. The
surplus shows a growth in the net assets of the country (Net assets = Assets-Liabilities).
If the current account balance is positive, it shows a current account surplus. Generally, Net
exports (X-M) is the main determinant of the current account balance.
Causes of Current Account Surplus
Candidates who are appearing for civil services exam should go through the causes of the current
account surplus and make their UPSC notes. The current account can have a positive balance due
to a multitude of reasons in the economy. Some of them are as follows-
• Depreciation of Exchange Rate- A currency is said to have depreciated when its value decreases
as compared to another currency. For example, if 1 dollar was equal to 70 rupees but now it
A current account is a balance of payments account that documents the flow of funds as a result
of imports and exports of goods and services of a country. This account either has a positive
balance (surplus) or a negative balance (deficit). A current account surplus means that the current
account has a positive balance of payments. In other words, the exports of a country exceed the
imports.
Candidates preparing for the upcoming IAS exam must learn about Current Account Deficit at
the linked article.
In this article, we shall discuss at length what is current account surplus, what is its significance
and more. All government exam aspirants must review the information discussed further below
in the article.
Balance of Fiscal Deficit
Payments
Fiscal Policy of Tax Policy Council & Tax
India Policy Research Unit
What is Current Account Surplus?
Every country needs to record their inflows and outflows occurring due to trade in a particular
period. The current account is a statement that records the income and expenditure of a country
with other countries. It comprises the value of exports and imports of goods and services,
interest, dividends and profits, unilateral receipts/or payments from/to the rest of the world. But
what is the current account surplus?
When the country’s outflow is more than the inflow, meaning that the rest of the world owes
more to it than what is owed by said country, it is said to have a Current Account Surplus. The
surplus shows a growth in the net assets of the country (Net assets = Assets-Liabilities).
If the current account balance is positive, it shows a current account surplus. Generally, Net
exports (X-M) is the main determinant of the current account balance.
Causes of Current Account Surplus
Candidates who are appearing for civil services exam should go through the causes of the current
account surplus and make their UPSC notes. The current account can have a positive balance due
to a multitude of reasons in the economy. Some of them are as follows-
• Depreciation of Exchange Rate- A currency is said to have depreciated when its value decreases
as compared to another currency. For example, if 1 dollar was equal to 70 rupees but now it
