Question

State the meaning of autonomous and accommodating items, under Balance of Payments of India, with the help of an example.

Hint:

Autonomous items are also called ‘above the line’ items, while accommodating items are ‘below the line’ items in BOP accounting.

Answer 1

Autonomous items in the Balance of Payments (BOP) refer to those transactions that are undertaken independently of the BOP position, such as exports, imports, and foreign investments. These are driven by profit motives or international obligations. Accommodating items are those transactions that are undertaken to balance the BOP, such as borrowing from the IMF or drawing on foreign exchange reserves. These aim to offset deficits or surpluses in the autonomous account. Example: Export of goods is an autonomous transaction, while using foreign exchange reserves to bridge a deficit is an accommodating transaction.