Define the term ‘Trade Surplus’. How was the income received from trade surplus with India used by Britain?
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Answer:
When the value of exports is higher than value of imports, it is called as ‘Trade Surplus’.
(ii) Britain used this surplus to balance its trade deficits with other countries - that is. with countries from which Britain was importing more than it was selling to.
(iii) This is how n multi-lateral settlement system works - it allows one country’s deficit with another country to be settled by its surplus with a third country.
(iv) By helping Britain balance its deficits. India played a crucial role in the late- nineteenth century world economy.
(v) Britain’s trade surplus in India also helped to pay the so-called ‘home charges’ that included private remittances home by British officials and traders, interest payments on India’s external debt, and pensions of British officials in India.
It is a condition where the overall value of a nation's exports during the year exceeds the total import value.
1. British producers flooded Indian market during the 19th century. Exports of food grain and raw materials from India to the britain also increased, and the rest of the world.
2. The value of British exports to India was higher than the value of Indian imports.
3. Britian as such had Indian trade surpluses. That surplus was used by Britain to balance trade deficits with other countries.
4. This is how a multilateral system of settlement works which enables one country to be settled with a third country by its surplus.
5. India has been instrumental in helping Britain balance its deficits. Britian trade surplus in India helped British officials and traders pay home fees which included private remittances home.