What is mean by trade surplus? Why did Britain have a trade surplus with India.
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. When a country exports more than what it imports, it is known as trade surplus.
Britain had a trade surplus with India manily because India was one of it's cononies, and the British authorities undermined the wished of peasants in India. The British planters forced Indian peasants to grow opium and indigo over a large area instead of crops they used to grow. They bought it from the peasants at a very low price, way lower than the value to susatain them. Moreover, the British also imposed heave tax and export duties on Indian traders and merchants. In the 18th century Indian textiles dominated a large share in the world. But it had declined to about 3% of world's textiles by 19th century. Readymade clothes from Britan flooded Indian markets and local weavers faced a hard time. Thus, Britain exported more to Indain than imported from Indian and also the price at which they bought goods from India and imported to their country was very low. So, Britan maintained a trade surplus with India and used this trade surplus to balance it's trade deficiencies, like with China.
Britain had a trade surplus with India manily because India was one of it's cononies, and the British authorities undermined the wished of peasants in India. The British planters forced Indian peasants to grow opium and indigo over a large area instead of crops they used to grow. They bought it from the peasants at a very low price, way lower than the value to susatain them. Moreover, the British also imposed heave tax and export duties on Indian traders and merchants. In the 18th century Indian textiles dominated a large share in the world. But it had declined to about 3% of world's textiles by 19th century. Readymade clothes from Britan flooded Indian markets and local weavers faced a hard time. Thus, Britain exported more to Indain than imported from Indian and also the price at which they bought goods from India and imported to their country was very low. So, Britan maintained a trade surplus with India and used this trade surplus to balance it's trade deficiencies, like with China.
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Trade surplus:
When the value of exports is higher than value of imports, it is called as ‘Trade Surplus’.
Britain had a trade surplus with India for the following reasons:
(i) 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.
(ii) 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.
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