With reference to the international trade of India at present, which of the following statements 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 ✓ UPSC's answer
Why the answer is (d)
• Statement 1 is correct: India runs a persistent merchandise trade deficit — imports (crude oil, gold, electronics) exceed exports.
• Statement 3 is correct: India is a net exporter of services (IT, business services), with a services surplus of tens of billions of dollars.
• Statement 4 is correct: the services surplus only partly offsets the goods deficit, so the overall trade and current account remain in deficit in most years.
• Statement 2 is wrong: imports of iron and steel, chemicals, fertilisers and machinery have generally risen with industrial demand, not decreased.
• Hence 1, 3 and 4 only, option (d).
Why the other options are wrong
- (a) 1 and 2 only
- Statement 2 is wrong: those imports have risen.
- (b) 2 and 4 only
- Statement 2 is wrong; statement 3 is correct.
- (c) 3 only
- Statements 1 and 4 are also correct.
Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2020, held on 4 October 2020. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.