During the colonial period, India’s foreign trade was characterized by a large export surplus, however

Question

(I) ‘During the colonial period, India’s foreign trade was characterized by a large export surplus, however, this did not result in any flow of gold or silver into India.’

Justify the given statement with valid arguments.

(II) Explain the rationale behind choosing 'Self-reliance' as a central planning objective in India's development strategy.

Answer 1

(I) Throughout the colonial period, India's foreign trade was characterized by a significant export surplus. However, this surplus had detrimental consequences for the country's economy. This export surplus did not bring gold or silver into India. Instead, it was used to cover expenses incurred by an office set up by the colonial government in Britain, the expenses on the war fought by the British government, and the import of invisible items, all contributed to the drain of India's wealth. 

(II) 'Self-reliance' was adopted as a central planning objective in India's development strategy by the policymakers due to the following reasons: 

• To reduce the dependence on foreign nations, the stress was laid on mobilising domestic resources. 
• It was feared that the dependence on imported food supplies, foreign technology, and foreign capital may increase foreign interference in our policies.