The correct option is 2 and 3 only.
Explanation
The Balance of Payments (BoP) is a systematic record of all economic transactions between the residents of a country and the rest of the world. It functions as a flow concept, tracking the movement of goods, services, and assets over a specific duration.
Statement 1 is Incorrect
The BoP records transactions involving all residents of a country, not just the government sector. "Residents" include individuals, private sector firms, and the government. For example, exports by a private company or remittances sent by an individual are integral parts of the BoP.
Statement 2 is Correct
The BoP is a flow concept, meaning it records transactions that occur over a specified time period, typically a fiscal year (April 1 to March 31 in India). It does not represent a snapshot of a country's financial position at a single point in time (which is a stock concept, like International Investment Position).
Statement 3 is Correct
Historically, the BoP was divided into two main accounts: the Current Account and the Capital Account. However, following the International Monetary Fund's (IMF) Balance of Payments and International Investment Position Manual (6th Edition or BPM6), the classification has been updated. The Reserve Bank of India (RBI) now compiles and publishes data under three primary categories:
- Current Account: Trade in goods, services, primary income, and secondary income.
- Capital Account: Capital transfers and acquisition/disposal of non-produced, non-financial assets.
- Financial Account: Direct investment, portfolio investment, financial derivatives, and other investments (formerly part of the broad Capital Account).
Key Takeaway:
The Balance of Payments records transactions for all residents (private and public) over a specific period. Under the modern BPM6 standard adopted by the RBI, it comprises three distinct accounts: Current, Capital, and Financial.