Question

What are the main causes of adverse balance of payment?

Answer 1

Reasons for Adverse Balance of Payments:

(a) The single most important item of im­ports throughout was food-grain, particularly in the years of drought. The value of imports of food-grains was of the order of Rs. 1,140 crores over the period 1983-86.

(b) Apart from food-grains, raw materials constitute another major item of imports. Prior to Independence, India exported raw materials. The scenario changed after the partition of the country and the launching of the five year plans. As indus­trialisation proceeded, the import bill on account of raw materials mounted up.