Question

What was trade surplus and why did british govt. addopted trade surplus?

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Answer 1

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.

(iii) By helping Britain balance its deficits. India played a crucial role in the late- nineteenth century world economy.

(iv) 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.

:) Hope it Helps !!!

Answer 2

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.