Question
With reference to the international trade of India at present, which of the following statement is/are correct?
1. India’s merchandise exports are less than its merchandise imports.
2. India’s imports of iron and steel chemicals, fertilisers and machinery have decreased in recent years.
3. India’s exports of services are more than its imports of services.
4. India suffers from an overall trade/current account deficit.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 4 only
(c) 3 only
(d) 1, 3 and 4 only
Answer:
D
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Explanation:
1. Statement 1 is correct. India has been experiencing a trade deficit in its merchandise trade, where the value of imports exceeds the value of exports.
2. Statement 2 is incorrect. It contradicts the trend of imports in recent years, as it states a decrease in imports of specific items. Without specific data, it is not accurate to claim a decrease in imports for these particular categories.
3. Statement 3 is correct. India has a surplus in its trade of services, where the value of service exports is higher than the value of service imports. This surplus in the services sector helps offset the merchandise trade deficit.
4. Statement 4 is correct. Given the trade deficit in merchandise trade, along with other factors such as income and transfer payments, India experiences an overall trade/current account deficit. This means that the value of imports and outflows of income and payments is higher than the value of exports and inflows of income and payments.