There were principal changes in the composition of India’s foreign trade after independence? (Answer according to 4marks)
Answers
Foreign trade has been considered as an engine of growth and a poor country cannot afford the luxury of foregoing foreign trade.
Foreign trade- (a) permits proper use of the resources of the country; (b) makes available necessary inputs for industrialization; (c) provides outlet for surplus production; and (d) helps a country to deal with the periods a natural calamities (droughts, floods, etc.) through import of food grains and other necessary consumer goods.
An appropriate and skillfully designed foreign trade policy is essential for the planned accelerated economic growth in a developing country.
A. Volume of Trade:
The volume of India’s foreign trade has increased considerably during the planning period. It has increased from Rs. 1250 crores in 1950-51 to Rs. 3169 crores in 1970-71, Rs. 19260 crores in 1980-81 and Rs. 2286500 crores in 2009-10. The expansion was particularly very fast after 1970-71. The pattern of India’s foreign trade was completely change as a result of economic development and industrialisation during the planning period.
B. Balance of Trade:
After independence, India has been constantly experiencing an adverse balance of trade (i.e., the difference between the value of exports and the value of imports) during most part on the planning period.
C. Composition of Trade:
Composition of foreign trade refers to the composition of imports and exports. A study of the changes in the composition of foreign trade helps us to analyse the rate and direction of economic progress in the economy.