Autonomous and Accommodating items:
Autonomous transactions are the transactions between the residence of two countries which take due to the consideration of profit. The autonomous transactions take place on both current and capital accounts. Autonomous transactions are not conditioned by the balance of payment status of the country i.e. irrespective of whether balance of payment is favourable or unfavorable. These transactions are not done to establish identity of balance of payment. These are also known as “above the line items”. Balance of payment is in surplus if the autonomous receipts are greater than autonomous payments. Balance of payment is in deficit if the autonomous receipts are less than autonomous payment.
According transactions are those transactions which are not done due to the consideration of profit but restore identity of balance of payment. These are undertaken to maintain balance in the balance of payments accounts. These refers to transactions that take place to cover deficit arising from autonomous transactions. Accounting transactions are also known as ”bellow the line items” and include foreign exchange reserves and borrowing to meet balance of payment deficit.
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