The balance of payment (BoP) position of India has been making headlines. There has been a large scale criticism of the general handling of the economic policies of the country and more specifically, the halt in the advancement of the reform process. It is in this backdrop that we felt that it would be relevant to see the issue from a historical perspective. This study, therefore, traces the balance of payment position from 1951 with regard to some variables like exports, imports, current account deficit, and so forth. We have also examined (in detail) the contents of balance of payment under various heads of account - like current account and capital account between the periods from 2001 to 2012. Furthermore, we have endeavored to investigate whether a relationship exists between some of the variables in the balance of payments like the flow of FDI and FPI, private transfers and bank's external liabilities, and between capital and current account inflows.

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