A systematic record that summarises all the economic transactions of a country with the rest of the world in a year is called the:

The Balance of Payments (BoP) is a statement that records all economic transactions between the residents of a country and the rest of the world during a given period, usually a year. It includes trade in goods and services, income, transfers, investments and loans. In India, the BoP data is compiled and published by the Reserve Bank of India (RBI).

The BoP has two main accounts:

Current Account: records the export and import of goods (the balance of trade, or visible trade), the export and import of services such as IT and tourism (invisibles), income such as interest and dividends, and current transfers such as remittances sent home by Indians working abroad. India is the world's largest recipient of remittances.

Capital Account (with the financial account): records capital flows, such as foreign direct investment (FDI), foreign portfolio investment (FPI), external commercial borrowings, foreign aid and banking capital.

In accounting terms, the BoP always balances, because any deficit in the current and capital accounts is met by changes in the country's foreign exchange reserves. In practice, a "BoP deficit" means that the country had to use its reserves or borrow to pay for its transactions.

India faced a serious BoP crisis in 1990-91, when its foreign exchange reserves fell to an amount enough to pay for only about two weeks of imports. The government had to pledge gold with the Bank of England and the Bank of Japan to raise money. This crisis led to the economic reforms of July 1991, known as Liberalisation, Privatisation and Globalisation (LPG), introduced by Finance Minister Manmohan Singh.

Why not the other options?

• ✗Balance of Trade is only the difference between the value of exports and imports of goods.
• ✗The Current Account is only one part of the BoP.
• ✗Foreign exchange reserves are the stock of foreign assets held by the RBI.