explain important features of india s foreign trade during 1951-1990
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Answer:
The patterns of India’s foreign trade have changed in the past three decades. Exchange with emerging markets and developing countries has expanded spectacularly. India’s imports, however, have expanded faster than the exports, so balance-of-payments problems may make the economy vulnerable.
From independence in 1947 to the early 1990s, India was basically a closed economy that was governed according to socialist principles. Liberalisation began in the 1980s and then accelerated in the early 1990s. A balance of payment crisis forced the government to lend from the International Monetary Fund and the World Bank. The international financial institutions forced it to introduce reforms. Manmohan Singh, then the finance minister, used the opportunity to entrench liberal principles in economic policymaking (see interview with Salman Anees Soz in Focus section of D+C/E+Z e-Paper 2018/08).
Today, the formerly state-run economy is largely driven by market dynamics. This is true of India’s foreign trade. India was a founding member of the World Trade Organization (WTO) in 1995, and had previously been involved in the General Agreement on Tariffs and Trade (GATT), which ultimately spawned the WTO. India is in favour of a multilateral trade regime.
The patterns of India’s foreign trade have changed considerably since the early 1990s. From the financial year 1990/91 to the one of 2017/18, the total value of goods exports increased more than 16 times: from $18 billion to over $300 billion. During the same time span, goods imports increased almost 20 times: from $ 24 billion to more than $ 460 billion.
In the export basket, there is a noticeable shift away from traditional sectors such as textiles and agricultural commodities. The share of engineering goods has increased from 12 % to 28 %. India has also become the pharmacy of the world, exporting medically important drugs (see Deepak Sapra in Focus section of D+C/E+Z e-Paper 2016/02). Moreover, it is now the world’s back-office because companies from rich nations have outsourced business processes and other IT-intensive and knowledge-based operations to Indian partners. The revenues from such services bolster India’s balance of payments, and so do migrants’ remittances, but they do not show up in the merchandise trade statistics.