Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Indian Economy on the Eve of Independence

Question:

What were the expenses for which India's export surplus was used under colonial rule?

Options:

Import of Invisible items

Import of essential commodities for domestic consumption

Payments for the colonial government's expenses in Britain and war

Both 1 and 3

Correct Answer:

Both 1 and 3

Explanation:

Throughout the colonial period, the most significant characteristic of India's foreign trade was the generation of a substantial export surplus. However, this surplus came at a tremendous cost to the country's economy. Essential commodities like food grains, clothes, and kerosene were scarce in the domestic market. Additionally, this export surplus did not result in the inflow of gold or silver into India. Instead, it was utilized to cover expenses incurred by a colonial government office in Britain, expenses related to wars fought by the British government, and the import of invisible items. All these factors contributed to the draining of Indian wealth.