Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Indian Economic Development: Indian Economy on the Eve of Independence

Question:

What was the most important characteristic of India's foreign trade throughout the colonial period?

Options:

Import surplus

Balanced trade with trading partners

Generation of a large export surplus

None of the above

Correct Answer:

Generation of a large export surplus

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.