Autonomous Items

  • Autonomous items refer to those international economic transactions in the
    current account and capital account, which take place due to some economic motive such as profit maximisation.
  • These transactions are independent of the state of BOP account.
  • These items are also known as ‘above the line items’.
  • For example, if a foreign company is making investments in India with the aim of earning profit, then such a transaction is independent of the country’s BOP situation.

Accommodating items

  • Accommodating items refer to the transactions that are undertaken to cover deficit or surplus in autonomous transactions, i.e., such transactions are determined by net consequences of autonomous transactions.
  • These items are also known as ‘below the line items’.
  • For example, if there is a current account deficit in BOP, then this deficit is settled by capital inflow from abroad. The sources used to meet a deficit in BOP, are: (i) Foreign exchange reserves; (ii) Borrowings from IMF or foreign monetary authorities.

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