What are Autonomous Transactions (Items) in BoP Class 12

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What do you mean by autonomous Items (transactions) in Balance of Payments (BoP )

See, all economics transactions in BoP either is autonomous or accomodating transactions.

In short, if I explain, autonomous transactions are those transactions that are undertaken for-profit motive.

autonomous transactions are the main cause of BoP deficit and Surplus.

Because such transactions are independent of other BoP transactions mainly undertaken only for profit Motive.

Let’s understand with a simple example

suppose, You as an individual running a trading company. You want to import some electronics items from the USA worth $ 1 million.

Your motive is to import from the USA and sell it in the Indian domestic market solely to earn a profit.

Let’s understand it, You are contemplating only your individual profit. In this whole process 1 million foreign exchange would be an outflow. This may result in India’s current account deficit BoP.

Such individual transactions are autonomous items in the Balance of Payments.

Definition of Autonomous transactions (items)

Autonomous items refer to those international economic transactions, which take place due to some economic motive such as profit maximization.

Sandeep Garg

A BoP transaction that is independent of all other BoP transactions is called an autonomous transaction.

S.K Aggarwal

Autonomous items refer to such BoP transactions which are undertaken with a view to making profits.

T.R Jain

What are above the line items in BoP

autonomous items or transactions themselves are called above the line items in BoP.

Does autonomous transactions occur in both capital and current account of BoP

Yes, autonomous transactions occur in both capital and current account of BoP.

Examples of Autonomous transactions on BoP

Current Account:-

  1. exports and imports of goods
  2. income receipts and payments
  3. transfer receipts and payments
  4. exports and imports of services

Capital Account:-

  1. Investments to and from abroad
  2. Borrowing to and from abroad for the purpose of earning interest.

What is the cause of deficit in BoP.

Autonomous transactions are the main cause of deficit in BoP.

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Anurag Pathak
Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.
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