Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Indian Economy on the Eve of Independence

Question:

In the question given below, there are 2 statements marked as Assertion (A) and Reason (R). Choose the correct alternative from the following options.

Assertion (A)- During the British era, India's foreign trade generated a huge export surplus but still the nation faced severe poverty.

Reason (R)- The surplus was used to make payments for the expenditure incurred on the development of the agriculture sector for the production of rice, and wheat as green revolution had arrived in the country.

Options:

Both (A) and (R) are true and (R) is the correct explanation.

Both (A) and (R) are true but (R) is not the correct explanation of (A).

(A) Is true but (R) is false.

(A) Is false but (R) is true.

Correct Answer:

(A) Is true but (R) is false.

Explanation:

During the British era, India's foreign trade generated a huge export surplus but still, the nation faced severe poverty. This export surplus did not result in any flow of gold or silver into India. Rather, this was used to make payments for the expenses incurred by an office set up by the colonial government in Britain, expenses on war, again fought by the British government, and the import of invisible items, all of which led to the drain of Indian wealth.